On the Horizon?

After years of dreaming about homeownership, I finally purchased my first house in 2008. It wasn’t easy. I was a single mother living in one of the nation’s priciest markets, and I saved, picked up freelance work, and borrowed from multiple people to buy a 1,200-square-foot home located 90 traffic-filled minutes from my job in Los Angeles. 

Today, that home has more than doubled in value. Moreover, it’s now a rental property, and the income it generates covers the mortgage and then some.

My story is hardly unique. Property ownership has been a cornerstone to building wealth in this country, and many of our ideals are set up around that fact.

Yet there’s been a change over the past few years, and if the trend continues, it will, over time, affect the way many remodelers go to market. 

First, a significant percentage of single-family homes sold today are purchased by investment firms­ as rental properties. This began during the recession when private equity companies started scooping up foreclosures, and although there’s been less activity in 2023, the numbers remain high, especially in the Sunbelt.  

For example, in the Dallas-Fort Worth metroplex, where I live, investors purchased about 30% of all single-family homes last year, according to research from John Burns Real Estate Consulting.

And some analysts predict that as soon as 2030, institutional investors may control 40% of all U.S. single-family rental homes. (Currently, there are some state, and even federal, efforts to stop this trend, but we’ll see how that pans out.) These companies also add to the housing supply with built-for-rent communities. 

Alongside this financial shift is a growing ideological one. There’s a subtle but definite cultural push away from property ownership, and I’ve noticed multiple articles and podcasts in support of the idea of renting. This line of thought alarms some people, such as author and entrepreneur Carol Roth. Her recent book You Will Own Nothing warns that this is a perfect environment for large corporations and other powerful entities to solidify their positions and effectively lock everyone else out. 

Regardless of how you feel about the trend, if it continues, a shift away from individual homeownership will affect remodeling over time.

Regardless of how you feel about the trend, if it continues, a shift away from individual homeownership will affect remodeling over time. Currently, multi-state companies such as RESICAP have large divisions that remodel homes for the rental market, and there are plenty of local players too, such as Make Ready Residential, which specializes in renovations specifically for Dallas rental properties. 

Going forward, if 30-40% of single-family homes purchased in the Sunbelt are to become rentals, remodelers there will have fewer large, highly custom projects and more of the quick turn K&B refreshes. This will commodify a large segment of the industry, similar to how the home improvement sector functions today. 

Whatever your personal opinion might be, this trend is an important one to watch.