I’m married, I have three kids, and I rent. Judging by the national housing discourse, you would assume my family is beleaguered—maybe even destined for the permanent underclass. But the federal 21st Century ROAD to Housing Act, passed this summer, will help to dispel that notion by making long-term renting more viable for families like mine.
The ROAD Act is Congress’s most consequential attempt to ease a housing crunch that has pushed home prices and rents to all-time highs, stymied the country’s economic growth, and made life harder for young American families. Broadly, the law seeks to boost the housing supply with an all-of-the-above approach: incentivizing cities and counties to build more housing with federal community-development dollars, promoting zoning and permitting reform, and expanding favorable construction financing.
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Most important for the family rental market is the law’s treatment of “build-to-rent” (BTR) communities. Though the law generally prohibits large institutional investors (defined as owning or controlling 350 or more single-family homes) from buying additional houses, it permits them to buy, build, and retain new BTR developments.
As Manhattan Institute senior fellow Brad Hargreaves has explained, these single-family-home developments “are purpose-built rental neighborhoods, often sharing a single tax lot, functioning in practice like horizontal apartment complexes. . . . The individual units may look like houses from the street, but the underlying ownership structure is indistinguishable from a conventional apartment building.” According to the National Association of Realtors, BTR units accounted for 9 percent of new single-family housing starts in 2024.
An early Senate version of the ROAD Act would have forced large institutional investors to sell new BTR units within seven years, threatening BTR economics by creating a mismatch between the near-term sale imperative and the projects’ long-term commercial financing. Fortunately, the final law nixed that requirement. With this type of development, large companies can deploy more capital and spread management, maintenance, and amenity costs across more units, much to the benefit of renters.
Homeownership is a cornerstone of American culture, but families often have good reasons to prefer renting. In my family’s metro area, San Diego, the most compelling is cost. One metric that can help families determine whether a 30-year mortgage is a good bet is the price-to-rent ratio, which compares the sale price of a home to the annual rental outlay of a comparable home. A price-to-rent ratio ranging from 1 to 15 suggests that buying a home is more advantageous, while a ratio of 21 or more indicates renting is better.
In our metro area, the current ratio is 29. Thus, even for a family with enough cash for a downpayment, renting can sometimes be the smarter financial play. And regardless of where you live, ownership comes with much higher variable maintenance costs. Some of that variability is embedded in rent, too—but not the headache that comes with it.
Renting also enables flexibility in the national labor market. One of ownership’s virtues is that it ties a family intimately to a local community. But that attachment makes it harder to take advantage of work opportunities elsewhere. With our 12-month lease, my wife and I can assess annually whether our current location makes sense, ensuring that a departure won’t turn into a financial quagmire. As the national economy evolves, we might decide our best bet is to pull up stakes and move elsewhere in pursuit of better opportunity. What could be more emblematic of the American Dream than that?
The downside, of course, is that renting is less stable. Our mom-and-pop landlord makes the same annual evaluation we do and would have every legal right to sell the house from under us at the end of our lease. With kids enmeshed in schools and friendships, it’s a fear that hangs over all renting parents.
The ROAD Act’s enabling of BTR neighborhoods reduces that worry. Restricting build-to-rent would have tilted the market toward our landlord’s interests and against ours. Unlike a mom-and-pop landlord, a large BTR owner provides a more durable housing expectation.
From the renter’s perspective, the more BTR housing on the market, the better. Even if we don’t opt for BTR ourselves, new BTR developments can help keep rents low and improve our bargaining power. BTR also gives empty-nesters a new way to downsize, meaning more of them put their homes up for sale, allowing the properties to change hands.
Renting sometimes offers young families advantages that homeownership does not. By broadening the definition of the American Dream, the ROAD Act makes the path to it smoother for families like mine.