More than half the new households formed in the next six years will be renters rather than homeowners, according to a new report by the Urban Institute. But there aren’t nearly enough rental units to keep up with demand.
The result will be (is) low vacancy rates and higher rents, alongside stagnant incomes. Renter incomes are on average only 70% of homeowner incomes and add to that wide spread student loan debt and you have a good investment I believe will continue to profit (and pass on any interest rate hikes to their tenants). This is not a short term blip on the radar screen either (see table below). While everyone on CNBS (sic) will be cheering to buy builders, I will be watching apartment REITs for my IRA account. Buy on weakness, sell on strength and ooooh, those dividends are a thing of beauty.
- Equity Residential (EQR) is perhaps the biggest name in the space, with 580 properties stretching across 24 states, representing some 152,000 rental units. Good liquidity trading 1.
