Home prices are projected to fall in 2023, but mortgage rates are rising, making it unaffordable for many Americans to buy a home. This has contributed to the slowdown in the real estate market. Pending home sales fell 4.6% in October, the fifth straight month of decline, according to the National Association of Realtors.
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But on the other hand, single-family home rentals have kind of jumped, and real estate investment trusts (REITs) are well positioned for investors.
Robert Donnelly, CFO of Marketplace Fairness, said: “REITs are typically traded on a stock exchange and offer a way for investors to invest in real estate without having to purchase and manage the property themselves.”
One of the leading REITs is American Homes 4 Rent. Founded in 2012, American Homes 4 Rent is a single family rental REIT with over 55,000 properties in 22 states and 200,000 residents. The company does its business by buying single-family homes in Metropolitan Statistical Areas (MSAs), which show strong population growth and high rates of increase.
The company looks like a strong investment going into 2023, in part because of its sheer size, which offers advantages in terms of efficiency and cost savings.
Jennifer Spinelli, Founder and CEO of Niche Home Buyer, said: “The company’s team partners with local service providers to get discounts on everything from repairs and maintenance to property taxes and insurance. We are piling up and can better manage both positive and negative factors such as rent delinquencies and cash flow disruptions.”
“With its size and experience, it is well-positioned to take advantage of any opportunity that may arise in the market. [housing] We can avoid recessions while mitigating potential losses,” said Spinelli. “Dividend payments allow investors to get some return on their investments, even during difficult economic times.”
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More broadly, backing REITs gives investors the opportunity to earn long-term returns.
“Another reason to consider investing in a REIT like American Homes 4 Rent is the potential for long-term capital appreciation,” said Dennis Sirshkov, strategist at Awning.com. As the value of the assets rises, the value of the REIT itself may also rise, potentially leading to long-term growth.”
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