Yes, Housing Starts Surge, but Rentals Are the Drivers
Should investors be concerned about overbuilding in the apartment sector, given these huge jumps in starts coupled with the fledgling single family housing recovery? No.
"We've had four years of zero supply," said David Toti of Cantor Fitzgerald. "There's still a groundswell of demand. The shift from owning to renting is still moving in favor of the renter."
Multifamily starts are now above 10-year averages. In fact they officially crossed them in October, but home ownership levels continue to contract. As for apartment performance? Landlords are raising rents and occupancies, and that does not point to any weakness, for now at least.
So why then are the multifamily REITs all down on the starts numbers? They have actually been underperforming all year, as investors seek higher yield in other sectors, like industrial REITs. But another factor could be Archstone Inc., an apartment building owner and developer owned by Lehman Brothers Holdings. It said Monday that it plans to raise up to $3.45 billion in its initial public offering that may happen this year. Investors may be making room for Archstone, pulling out of others to get in to the new player.
--Written by Diana Olick at CNBC
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV