When Kaplan Residential sold its high-profile apartment complex in the heart of Sandy Springs in July 2021, it did not invest in another property like this. Instead, the Atlanta developer pocketed $59.2 million for the 203 apartments and 10,000 square feet of retail space in the Square One building at the corner of Roswell Road and Hammond Drive.

Last year, Kaplan also sold Generation Atlanta, a 330-unit downtown apartment complex, to Canadian investors for $83 million. But, instead of investing her share of the profits in another apartment building or mixed-use development, she decided to build single-family homes that she would rent out rather than sell.

The developer now intends to invest $300 million in several future-build housing communities that are already under construction. Among its publicly announced projects are a 239-unit single-family community to be built in a development called Avondale Generation East, an active adult single-family community in Dallas, Georgia, and 183 rental townhouses in Cartersville, less than an hour from Atlanta.

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According to Nathan Kaplan, an associate of the company, all available funds from the company are channeled into the market for building single-family homes for rent. The same goes for GTIS Partners, a real estate investment firm that bought 4,700 single-family homes in nine cities, including Atlanta, in the years following the 2008 financial meltdown. Over the past four years, GTIS has been selling them all in favor of building its own single-family rental communities. Seven such projects, laid out like small villages, are reportedly underway in Phoenix and South and Central Florida.

Generation Avondale East is a new community being built by Kaplan Residential.

According to a New York Times report, the number of single-family homes built for the rental market increased by 30% from 2019 to 2020. It has quickly become the fastest growing segment of the housing market and is expected to double in the next 10 years.

Brad Hunter of consultancy Hunter Housing Economics says nearly 100,000 new homes were built last year, representing an investment of nearly $30 billion. The reason, in part, is that many home buyers are shut out of the traditional housing market, where the supply of new and existing homes is rapidly outstripping demand. Rising house prices and high down payments are also fueling the shift to renting.

According to real estate broker Redfin, the average home price in the United States rose 14% last year, to $357,000. In Atlanta, home price increases were even stronger in 2021. ReMax, the residential sales company, estimates that the average price of a home in Atlanta in 2021 rose 24%, to $354,000.

A new study released Feb. 7 by the National Association of Realtors shows that home ownership has become even more elusive for middle-class Americans. Declining housing affordability, combined with low inventory, means home buyers looking for affordable housing, especially in high-growth areas like Atlanta and its surrounding suburbs, are out of luck.

Kaplan Residential has sold this 203-unit apartment building in the heart of Sandy Springs to fund new single-family rental housing developments.

Nadia Evangelou, forecasting director at the National Association of Realtors, concluded that the dwindling housing supply meant many homebuyers had few options if they wanted to avoid renting.

Young, affluent families choose to rent rather than buy, as it offers greater flexibility as career choices or family situations change. They typically pay a small fee for lawn care and upkeep in addition to rent and have few of the worries that often come with home ownership.

But, by choosing to rent rather than own, first-time home buyers also lack the opportunity to build long-term wealth as a hedge against the rising prices that often accompany home ownership. the property. What will be the long-term effects of such a fundamental change in economic life in America is an important, though still unanswered, question.


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