Single-Family Rental REITs: Save The Gloom And Doom
Single-Family Rental REITs have uncharacteristically lagged this year- dipping by more than 30% - swept up by stiff headwinds across the housing industry from the historic surge in mortgage rates.
While residential rent growth has moderated significantly over the past quarter from the record double-digit levels seen earlier this year, the recent gloomy narrative on SFR REITs appears unwarranted.
While multifamily markets are poised to face supply headwinds from a recent surge in new development, homebuilders have pulled back from an already historically supply-constrained single-family market.
Cooling home price appreciation and tightening credit conditions is indeed bad news for many new “start-up” entrants into the SFR scene that are learning the hard way that the SFR game is a capital-intensive business that requires significant scale to operate profitably.
Despite the sharp rate-driven housing cooldown, household formations have actually accelerated this year, lifted by historic levels of inbound immigration and an uptick in birth rates - challenging two core tenants of housing skeptics' prognoses.
REIT Rankings: Single-Family Rentals
In the Hoya Capital Single-Family Rental Index, we track the three major SFR REITs: Invitation Homes (INVH), American Homes (AMH), and Tricon Residential (TCN) along with newly-listed Bluerock Homes (BHM) - a recent Blackstone spin-off. We also track NexPoint Diversified (NXDT) - which converted to a REIT from a closed-end fund this year - and owns minority interests in Vinebrook and NexPoint Home Trust.
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