I see a lot of positive sentiment toward apartment REITs on this board, especially AVB. No doubt they have a good track record, but they have had the advantage of many people losing their homes and forced to rent as well as tight credit making it difficult for people to qualify for mortgages and therefore forced to rent. They have been able to raise rates knowing credit is tight and it is difficult for renters to get mortgages and switch to owning. It seems to me that they are now heading into an unfavorable environment. Credit is easing, the monthly payments on a mortgage are cheaper than apartment rents, and big private equity firms are buying up single family housing in order to rent them out and compete with apartments - keeping a lid on apartment's ability to raise rents and also bringing more supply of rentals on the market. Wage growth is also anemic making it difficult to continue to raise rents on working people. I would avoid this area. Can someone explain to me the bull case for apartments going forward?
And I forgot mention maybe most important fact, that apartment REITs are expensive trading at high PE multiples. Why are investors so bullish on this sector?
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