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Leader in active quantitative equities across Australian equities, global equities, emerging markets and global small companies.
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As the renter market in the United States continues to grow, so does the opportunity for investors in a certain type of Real Estate Investment Trust.
Changing demographic and lifestyle preferences of people in their late 20s and early 30s, coupled a lack of a savings among people in this group and rising mortgage rates, points to an expanding renter market in the United States.
People are getting married later – 32 on average compared to 22 years old in the 1970s1. Meanwhile, this next generation of would-be home owners are graduating college with the highest levels of student debt on record2; almost half of millennials having no down payment savings at all, according to the US Census Bureau.
These demographic shifts are set against the backdrop of higher mortgage rates and affordability ratios not seen in 20 years3.
This confluence of factors is likely to expand the renter market in the US, which could present an opportunity for investors in single-family residential REITs.
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Unlike in 2008, when the US residential sector was at the centre of a sub-prime market collapse, investors are now looking to select segments of US housing to capture durable cash flows and sticky tenancies.
Amid a potentially worsening economic situation, the single family rental category is well positioned to produce reliable earnings. Tenants within the single family rental space have historically been duel income earners with kids in school might be less likely move in light of one job loss or any sort of growing uncertainty within their household picture.
Further, it’s within this category owner-operators are adopting smart tech, meaning they are able to manage and control their expenses better. This typically includes centralised monitoring stations that allow them to track and real time energy and water usage across their assets and reduce costs.
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[1] U.S. Census Bureau
[2] NCES – National Center For Education Statistics
[3] National Association of Realtors
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