Apartment REITs: Happy Landlords, Unhappy Renters
No more "Free Rent." Renters will receive an unwelcome surprise with the next renewal offer as rents across the country are suddenly surging at the fastest rate in a half-decade.
The demographic and pandemic-driven boom in household formations has clashed with record-low housing supply to push housing costs higher across the ownership and rental markets.
The vaccine rollout has halted the "urban exodus" and stabilized rental rates in coastal markets. Sunbelt and suburban markets, meanwhile, are reporting record-high rates of rent growth.
After lagging in 2020, Apartment REITs have gained nearly 30% this year, boosted by a strong slate of Q1 earnings results with seven of ten apartment REITs raising their full-year earnings guidance.
Apartment REITs aren't the bargains that they were in late 2020, but valuations still appear compelling as rent growth "catches up" with home values amid a backdrop of persistently low housing supply and robust demand.
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