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  • Alex Pettee, CFA

Apartment REITs: Rents Rising, Again



  • Read the full article on Seeking Alpha!

  • Apartment REITs delivered another solid year in 2018. Fundamentals improved throughout the year as strong rental demand more than offset peaking supply growth.

  • 'Renter Nation' is alive and well. Rising mortgage rates and tax reform have led to softening demand at the margins for homeownership, offset by strengthening demand for rentals.

  • For apartment renters, the modest relief from rising rents was short-lived. Leasing metrics improved throughout 2018, particularly new leases, which were up nearly 150 bps from last year.

  • Turnover rates remain near record lows as renter satisfaction remains very high. Low turnover has kept expense growth in-check despite pressure from rising property taxes.

  • Supply growth appears to have peaked in mid-2018 but will remain elevated in 2019 before pulling back in 2020. Rent growth is likely to rise above the rate of inflation well into the next decade.


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