The profitable single-family rental market has attracted two of the world's most prominent billionaires.
Elon Musk has teamed up with construction company Lennar to build his own community in Bastrop County in the greater Austin, Texas area.
The town, called "Project Amazing" in plan filings but officially named Snailbrook, will be made up of 110 single-family homes that will only be rented out to local employees of Musk-owned companies – for the time being. As The Real Deal reports, “If all goes well, Musk and Lennar’s new development may be a beta test for a quintessentially Muskian approach to the housing crisis: Just build it yourself.”
Build it and they will come?
The most obvious solution to the need for more housing is to increase the supply of homes, thereby balancing demand in both rental and homebuyer markets.
However, construction alone doesn’t address the root causes of the housing shortage and affordability crisis, which include restrictive zoning laws, land availability, and a high cost of living.
Additionally, the typical building company lacks the resources to create a new town from scratch. That could only be done by a billionaire, making it one of the more uncommon, but still viable solutions to the housing crisis.
But what about affordability?
At the same time as Musk’s project, Jeff Bezos-backed real estate startup Arrived Homes is allowing people to invest in fractional ownership of single-family rental properties for as little as $100. This model makes real estate investing more accessible and affordable to a larger pool of investors.
Developments like Project Amazing and Arrived Homes could have a significant impact on the real estate industry – but not everyone agrees that it will be a positive one.
Bezos and his real estate investment company have been accused of worsening the country's housing shortage and affordability crisis by turning family homes into expensive rentals. Additionally, mom-and-pop property managers are worried about losing business to another institutional investor.
Musk’s new town in Texas could attract investment to the area, creating job opportunities and new businesses that stimulate the local economy. However, his dual role of employer and housing provider could also potentially create conflicts of interest and ethical concerns in the workplace or at home.
It will be interesting to see how these projects develop in the coming years.
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