Alex Pettee, CFA
Manufactured Housing REITs: Housing Shortage Intensifies
It'll take more than a pandemic to slow down the perennially outperforming manufactured housing REIT sector. These REITs have proven to be immune from coronavirus-related headwinds, collecting nearly 100% of rents.
Powered by the macroeconomic tailwinds associated with the affordable housing shortage and favorable demographics, Manufactured Housing REITs have been the best-performing real estate sector of the past decade.
The positive momentum should be enough to keep the sector rolling in 2020. Beyond the sector-leading internal growth, external growth through acquisitions and site expansions have provided an added boost.
Near-term headwinds related to delayed openings at RV resorts, impaired rent-paying capacity among lower-income residents, and a slowdown in RV and MH unit sales remain risks to monitor.
Trading at the loftiest valuations in the REIT sector, investors will continue to demand perfection but haven't been let down in quite some time. Low supply and strong demographic-driven demand for housing continue to provide a compelling backdrop.