Houses for rent
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.