Houses for rent

Daily Freeman (Kingston, NY) - - BUSINESS -

The steady rise in U.S. home prices and rents in re­cent years has been a boon for land­lords with houses to rent.

That in­cludes real estate in­vest­ment trusts, or REITs, that snapped up thou­sands of fore­closed sin­gle-fam­ily houses in the years fol­low­ing the last hous­ing bust and con­verted them to rentals.

Wall Street has taken note. Pub­licly traded REITs that rent sin­gle-fam­ily houses posted a to­tal re­turn of 29.1 per­cent through the first three quar­ters of this year. By com­par­i­son, the Stan­dard & Poor’s 500 in­dex posted a to­tal re­turn of 7.84 per­cent in the same pe­riod.

Shares in the two largest sin­gle-fam­ily rental REITs — Amer­i­can Homes 4 Rent and Colony Star­wood Homes — have notched big gains this year.

Signs sug­gest there are yet more gains in store for the sec­tor.

Nearly 4 mil­lion new renters are ex­pected to vie for hous­ing over the next five years, with about 37 per­cent of them pro­jected to rent sin­gle-fam­ily houses, ac­cord­ing to Green Street Ad­vi­sors.

While apart­ment rent growth has be­gun to wane, it has risen for sin­gle-fam­ily houses. And both Amer­i­can Homes 4 Rent and Colony are well-po­si­tioned to grow their port­fo­lios of rental homes.

“The long-term con­sid­er­a­tions, these are all bullish de­vel­op­ments that weren’t in place the past two years,” said John Pawlowski, se­nior as­so­ci­ate at Green Street Ad­vi­sors.

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