REITs are securities that trade like a stock and invest in real estate directly through property ownership or mortgages. Consequently, revenue are mainly generated through rents or interest on mortgage loans.
Apartment demand has not let up, despite calls that improving economic conditions would push more into buying homes. Supporting the increased rental demand, millennials are finding jobs and moving out to cities.
Looking at home owners, homeownership rates are now at 63.7%, the lowest in 25 years, and Laurie Goodman, director of the housing finance policy center at the Urban Institute, argues that the rate could decline further further 2030. Meanwhile, rentals could continue to rise.
Moreover, without meaningful wage increases, renters may be stuck with rental apartments as they are not able to save enough for that first home down payment. [Renters Are Stuck, Continue to Support Residential REITs ETFs]
iShares Residential Real Estate Capped ETF
For more information on real estate investment trusts, visit our REITs category.
Max Chen contributed to this article.