There’s A ‘perfect storm’ Brewing In The Family Housing Market — Here’s A Super Simple Way To Take Advantage

There’s A ‘perfect storm’ Brewing In The Family Housing Market — Here’s A Super Simple Way To Take Advantage

Jing Pan

 

There’s A ‘perfect storm’ Brewing In The Family Housing Market — Here’s A Super Simple Way To Take Advantage

Inflation is out of control. So it’s no surprise that real estate is red hot as well.

According to real estate investing company CARROLL founder and CEO Patrick Carroll, his company has raised rents up to 30% over the past year.

Of course, costs are going up as well.

“So as our costs go up — our costs of interest, our costs of renovations, our cost of our employees,” Carroll tells Fox Business. “We need to push those increases along through rent increase.”

Because of rising property prices, renting has become the only option for a lot of people.

“We are seeing a supply-demand imbalance,” he adds. “And now they have a lack of buyers because of mortgage rates. So, again, this has all kind of been a perfect storm for the multifamily business.”

While it’s hard to say whether rent increases are sustainable, Carroll says that his company’s occupancies are at all-time high.

If you want to tap into the multifamily real estate business, here are three real estate investment trusts that specialize in the segment. Wall Street also sees upside in this trio.

Don’t miss

Camden Property Trust (CPT)

Camden Property Trust owns, manages, develops and acquires multifamily apartment communities. It has investments in 171 properties containing 58,425 apartment units across the U.S.

The company also has 5 properties under development. Upon completion of those, its apartment unit count would reach 60,267.

In Q2, Camden posted a strong occupancy rate of 96.9%, in line with the year-ago period.

The REIT was also earning more rent from each unit. In Q2, new lease and renewal lease rates were, on average, 15.3% above expiring lease rates when signed.

Camden Property pays quarterly dividends of 94 cents per share, translating to an annual yield of 2.7%.

Baird analyst Wesley Golladay has an ‘outperform’ rating on Camden and a price target of $153 — roughly 9% above where the stock sits today.

Mid-America Apartment Communities (MAA)

Mid-America Apartment Communities is a REIT with a portfolio diversified mainly across the high-growth sunbelt regions of the U.S.

As of June 30, the company had investments in 101,229 apartment units across 16 states and the District of Columbia.

In Q2, Mid-America’s same-store portfolio revenue grew 13.7% year over year. Meanwhile, its same-store portfolio net operating income rose 17.1% from a year ago.

For full-year 2022, management expects the REIT’s same-store portfolio to achieve effective rent growth of 12.75% to 13.75% and net operating income growth of 14.0% to 16.0%.

Mid-America’s board of directors recently approved a 15% increase to the company’s quarterly dividend rate to $1.25 per share. At the current share price, that translates to an annual yield of 2.7%.

Jefferies analyst Jonathan Petersen sees potential in this multifamily REIT. He has a ‘buy’ rating on the stock and a price target of $201 — around 10% above the current levels.

Equity Residential (EQR)

Equity Residential is another big player in the multifamily real estate business: the company commands a market cap of around $29 billion and has a portfolio of 310 properties consisting of 80,227 apartment units.

The portfolio is geographically diversified, too. Equity Residential has an established presence in Boston, New York, D.C., Seattle, and San Francisco — and is expanding in metros like Denver, Atlanta, Dallas, and Austin.

Just like the other two REITs, Equity Residential is making more money in this inflationary environment.

According to the latest earnings report, Equity Residential’s same-store revenue increased 13.6% year over year in Q2. The company attributed the growth to strong occupancy rates and “continued growth in pricing power.”

The REIT has a quarterly dividend rate of 62.5 cents per share, giving the stock an annual yield of 3.2%.

Mizuho analyst Haendel St. Juste has a ‘buy’ rating on Equity Residential and a price target of $79. Considering that the REIT has climbed quite a bit recently and trades at $77 per share at the moment, it’s approaching that target fast.

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  • ‘There’s always a bull market somewhere’: Jim Cramer’s famous words suggest you can make money no matter what. Here are 2 powerful tailwinds to take advantage of today

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Source: finance.yahoo.com

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Prices falling in expensive cities

In two-thirds of major regional housing markets — 98 out of 148 — prices continue to drop, especially in more expensive locations.

We may see expensive markets fall further, which if that happens sooner than later, would make it an excellent time to buy into an expensive market. This wouldn’t have registered as a possibility even a few months back.

It’s difficult to predict if this will happen. And if so, whether falling prices become offset by the federal interest rate hikes practically certain to arrive in the coming months.

The only way to know for sure is to wait until the latest rate hike sets in.

Meanwhile, keep in mind that — as with any investment — it’s best time to buy is usually when prices are low.

‘Deals to be had:’ Homebuyers Should Ask For These Incentives While They Have The Upper Hand

The days of waiving contingencies such as appraisals and forgoing inspections are fading into the rearview mirror. Still, contract activity remains slightly competitive depending on your location.

At least 24% of buyers waived the inspection contingency in December 2022, according to the National Association of Realtors confidence survey, up from 16% a month prior and 19% one year ago. An additional 24% of buyers waived an appraisal contingency in December, up slightly from 16% in November and 21% a year ago.

Home inspection contingencies are particularly important because it can let you know if there’s a deal-breaking issue with the property before a purchase occurs. It can also help you negotiate repairs with the seller, which is becoming increasingly common in today’s market.

“If buyers have this short window to buy where they can get incentives to purchase, [they] would rather buy where they have an opportunity to really think about it, get an inspection, a financing contingency and not feel rushed,” Jeff Reynolds, broker at Compass and founder of UrbanCondoSpaces.com, told Yahoo Finance.