INCREASING INCOME FOR APARTMENT OWNERS

 

Here are some interesting excerpts from an Investopedia article published:

Some investors say that since single-family home sales are seeing an influx, fewer people are moving into apartments. But that's a mistake.

David Lee, who manages a real estate fund for T. Rowe Price said, "People believe it's a zero-sum game; that if for-sale housing is doing well, then rentals will not do as well."

In fact, Lee says it's a "win-win situation."

Andy McCulloch, head of Research at Green Street Advisors, which specializes in U.S. real estate trends, agrees: There's a "misconception that growing momentum in the single family market will hurt the rental market."

So how could it be that if the single-family housing market is booming, then the apartment rental sector is also doing well? The answer comes from different projections based on how many new households will be formed between now and 2016...

In that time, some 5.5 million new households are expected to be formed. Of these, 3.8 million, or nearly 70%, will be renters, says Jeffrey Friedman, CEO of Associated Estates Realty.

The uptick in new households is going so fast, that demand is outpacing supply by 2.5 million apartments, according to a March 2013 report from the National Association of Real Estate Investment Trusts. That’s an astronomical number…

This supply/demand dynamic could lead to increasing income for apartment owners.

Risks to Consider: Of course, with investing, nothing is guaranteed. A slowdown in the economy could slow the pace of new households and rents could remain flat.

 

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Diane Walker

Diane Walker

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