Greg Hancock has built 7,200 build-to-rent units in Phoenix since 2016. As of April 2026, he cannot get a debt commitment on any of his seven projects currently under construction — and says he may lay off workers for the first time in five decades.
The culprit is a single provision buried in the Senate's 21st Century ROAD to Housing Act, passed in March. It requires any institutional investor owning more than 350 single-family homes to sell or convert those properties within seven years. The House passed a companion bill the same month. Both versions now sit in legislative limbo, awaiting conference committee reconciliation.
The provision's ambiguity is doing the real damage. Freddie Mac and Fannie Mae have backed away from financing BTR communities, per developer reports cited by Propmodo. Private lenders have either paused new exposure entirely or imposed enhanced underwriting scrutiny that effectively functions as a moratorium. Capital markets do not wait for statutory clarity — they price the worst-case outcome immediately.
Phoenix had the most to lose. The metro led the nation in BTR transaction volume in 2025, with nearly 1,500 units trading for more than $500 million, according to Propmodo's reporting. The market delivered more than 7,500 BTR units last year, accounting for over 40% of all BTR completions across the entire Western United States. A financing freeze in Phoenix is not a local story; it is a national stress test for the asset class.
The legal interpretation problem compounds the capital problem. Developers who pioneered cottage-style horizontal apartments — including NexMetro Communities and Christopher Todd Communities — argue their product qualifies as multifamily under federal definitions and falls outside the bill's scope. Attorney Adam Baugh, who represents BTR clients navigating the legislation, disputes that reading. The bill, he notes, defines single-family homes as structures with two or fewer dwelling units, a threshold that captures the overwhelming majority of BTR product currently in the ground.
One of Baugh's clients has already restructured an entire project, switching from single-family cottages to triplex units specifically to sidestep potential regulatory exposure. That is the kind of product-level distortion that cascades through construction pipelines, subcontractor schedules, and municipal permitting queues — none of which can be unwound cheaply or quickly.
The collateral damage extends to traditional homebuilders. Bulk sales of remaining inventory to institutional rental buyers — a standard exit strategy for builders who develop, stabilize, and then recycle capital — would become functionally unviable under a mandatory seven-year disposition requirement. Sean Fergus of Zonda Home said the bill eliminates the exit strategies developers rely on to justify underwriting new supply in the first place. Remove the institutional exit, and the pro forma on the next ground-breaking simply does not work.
There are political signals, if not yet legal ones, pointing toward relief. Arizona Congressman David Schweikert has said he plans to call a conference committee and intends to signal to lenders that the BTR provision will be stripped from the final bill. HUD Secretary Scott Turner visited a NexMetro project in Commerce City, Colorado last week and voiced explicit support for cottage-style rental housing, lending executive-branch credibility to the sector's case for exclusion.
But congressional timelines and lender risk committees operate on different clocks. Schweikert's public statements carry no binding weight until reconciliation produces enrolled legislation. In the interim, every week of frozen financing is a week of carrying costs, stalled construction draws, and workforce uncertainty — Hancock's potential layoffs being only the most visible example. Trepp data on BTR loan origination volume for Q1 2026 has not yet been published, but deal teams across the sector report a near-total cessation of new construction loan closings since the Senate vote.
The market structure irony is considerable. BTR was, until March, one of the few corners of residential construction adding meaningful workforce-attainable rental supply in Sun Belt markets where single-family for-sale prices remain out of reach for median-income households. CBRE reported national BTR completions exceeded 27,000 units in 2024, with Phoenix, Dallas, and Atlanta accounting for the bulk of that output. Legislation nominally aimed at expanding housing access has, in practice, frozen one of the most productive supply mechanisms in the country.
Greg Hancock broke ground on his first BTR community a decade before the asset class had an institutional name. Today, with seven sites in the ground and no lender willing to fund the next draw, the question is not whether the Senate provision gets reconciled out of the final bill — most observers expect it will — but how many projects get mothballed, how many workers get laid off, and how many units never get built in the months it takes Congress to get there.