A strong recovery in single-family homes may spell bad news for apartment companies that reaped big profits over the last few years by renting to displaced homeowners, Fitch Ratings says in a new report.
The ratings agency says that an improving housing market could weigh on rent growth for multifamily real-estate investment trusts. Fitch estimates that 80% of the growth in apartment demand between 2009 and 2011 was derived from declining homeownership.
“As such, improvements in the single-family market will negatively impact apartments,” says Fitch Analyst Britton Costa in the report. “Over time, multifamily REIT demand and operating fundamentals will slow down as rents become less affordable and interest in homeownership rises.”
Read more...Investors Assess Apartments After the Love Is Gone - Developments - WSJ
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