The Wall Street Journal’s Property Report published, Soaring Rents Make It a Very Good Time to Own an Apartment Building, on how rents have been rising at double-digit rates. In the article, apartments stand to be a beneficiary of the rapid increase in rents as housing is short on supply, high on demand amid a historic and lingering housing shortage resulting from a decade of under-building. The article states, “The 10% rise in national asking rents in August is highest on record, helped by more young workers returning to cities.”
The RESI Index is comprised of roughly 60% apartment companies that stand to benefit as the positive effects from the post-pandemic “housing boom” are reverberating across U.S. rental markets with rents suddenly soaring at the fastest rate on record.
The article describes the demand as:
It has rarely been a better time to be a big apartment-building landlord[…] Fast-rising rents reflect several factors, analysts say. Younger adults who lived with family last year are now renting their own apartments, in many cases as they prepare to head back to the office. Middle-income workers who have been priced out of the scorching housing market have little choice but to pay higher rents. Limited growth in new apartment supply, meanwhile, can’t keep up with demand.
Apartment occupancy rates, a key metric for helping landlords determine how much they can increase rent, hit a record high of 97.1% in August.
RESI Index constituents can provide an inflation hedge for investors as it benefits from both rent increases as well as asset replacement costs increase.