![]() ![]() Depository receipts are normally combined with the underlying security. The Top Ten holdings do not include money market instruments or futures contracts, if any. They may not be representative of the fund's current or future investments. * Any holdings, asset allocation, diversification breakdowns or other composition data shown are as of the date indicated and are subject to change at any time. ![]() John Pawlowski, Alan Peterson, and Robyn Luu, "Residential Insights: Facing the Music," Green Street Advisors, October 24, 2022. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. What's more, today's apartment renters could someday move on to renting single-family homes, which would support the business of single-family home rentals.īefore investing, consider the funds' investment objectives, risks, charges, and expenses. Renters of single-family homes tend to have longer average stays than apartment renters, and that lower turnover typically means reduced repair and maintenance costs for owners. Renting a single-family home is generally more affordable than owning in the Dallas area. For example, Invitation Homes ( ) is a Dallas-based owner of single-family rental homes. Some REITs focus on renting out single-family homes instead. Of course, apartments aren't the only option for renters. ![]() For example, Mid-America Apartment Communities ( ) is a REIT that focuses on ownership, development, and management of apartment communities across the Sun Belt and mid-Atlantic, with complexes from Florida to Nevada. More specifically, we have found potential opportunity in this segment among residential property owners in US Sun-Belt markets, which, compared with urban and northern coastal markets, have benefitted from higher job growth, lower cost of living, and in some cases, tax incentives for corporate relocations. Further, they can potentially benefit from relatively low-cost debt financing through government-sponsored enterprises Fannie Mae and Freddie Mac. Compared to other types of REITs, residential REITs tend to carry less debt and are therefore less likely to need to refinance their debt at higher rates in the near term. The segment also has some defensive characteristics that could help it hold up better than some other property types in a rising-rate, weakening economic environment. In fact, a median-income household looking to buy a median-priced home could expect to spend between 45% and 50% of their income on their total housing costs-more than double what they would spend on comparable rental housing. 1 And the affordability gap between buying and renting a home is historically wide. Due to rising rates since the start of 2022, the typical prospective homebuyer's monthly mortgage payment has increased by roughly 60%. With mortgage rates rising and home prices still high, renting is by far the more affordable option for many people and families. High ownership costs could benefit residential REITsįor 2023, we're seeing notable potential opportunity among REITs that operate residential rentals.ĭemand for housing has been outstripping supply for years. ![]()
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