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Are Apartment REITs Overvalued?

Aaron Levitt Oct 19, 2016

As investors maintain their search for income solutions in a world of perpetually low interest rates, real estate investment trusts (REITs) continue to garner plenty of attention. Gathering the most looks have been multifamily and apartment REITs.

Benefiting from numerous housing trends, apartment REITs have been on fire the last few years, as investors look to them for dividend growth and capital appreciation. The problem is, maybe too many people are looking.

With apartment REITs possibly being too hot, cracks are starting to form in their foundation. Rent growth has slowed and even declined in some markets, and recent housing trends supporting them have dwindled. And let’s not forget that several real estate gurus have started to sell the sector in all of this frothiness.

All in all, investors looking towards apartment REITs, at this time, could be setting themselves up for a major downturn.

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