Apartments are a critical component of the RESI Index , and the overall housing market, as housing is undergoing a seismic change due to demands and demographics.
Apartment constituents in the RESI index have unique competitive advantages of high-demand locations, industry-leading scale, and local management enhance ability to efficiently maximize the resident experience and Barron’s highlighted the current opportunity:
Skyrocketing home prices and mortgage rates make this a tough time to buy a house. But it’s an opportunity for bargain hunters to invest in apartment real estate investment trusts, which have been clobbered this year and are down about 20% despite surging rents […]
Apartment REITs are currently trading at a 21% discount to the value of their underlying assets, calculates Green Street, a commercial real estate analytics firm. As recently as a year ago, they were trading at a 3% discount […]
It isn’t surprising that apartment REITs have tumbled along with stocks and bonds this year in a broad market selloff. Real estate investments are sensitive to interest rates, which raise borrowing costs […]
But high rates are actually good news for apartment REITs, since they make buying a home more difficult. After a period of record-low mortgage rates, the 30-year fixed rate has nearly doubled to 5.51%. In May, the median existing-home sales price topped $400,000 for the first time, further straining affordability.
“There are some would-be buyers who are now pushed into the rentership pool,” says Haendel St. Juste, managing director and REITs analyst at Mizuho Securities. “The dramatic shift in the cost of homeownership is a net benefit for the rental side.”
The RESI Index has approximately 37% exposure to the REITs mentioned in the article:
- AvalonBay Communities / AVB
- Equity Residential / EQR
- Camden Property Trust / CPT
- Mid-America Apartment Communities / MAA
- Apartment Income REIT / AIRC
- UDR / UDR
Article can be found here: https://www.barrons.com/articles/apartment-reits-stocks-home-prices-mortgage-rates-51657819229