student loan debt (3)

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New Households, Student Loans And Apartment REITs

20120329-graph-student-debt-the-trillion-dollar-threat-to-the-american-middle-class-03.png?width=300More than half the new households formed in the next six years will be renters rather than homeowners, according to a new report by the Urban Institute. But there aren’t nearly enough rental units to keep up with demand.

The result will be (is) low vacancy rates and higher rents, alongside stagnant incomes. Renter incomes are on average only 70% of homeowner incomes and add to that wide spread student loan debt and you have a good investment I believe will continue to profit (and pass on any interest rate hikes to their tenants).  This is not a short term blip on the radar screen either (see table below).  While everyone on CNBS (sic) will be cheering to buy builders, I will be watching apartment REITs for my IRA account.  Buy on weakness, sell on strength and ooooh, those dividends are a thing of beauty.

  • Equity Residential (EQR) is perhaps the biggest name in the space, with 580 properties stretching across 24 states, representing some 152,000 rental units.  Good liquidity trading 1.

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1290630?profile=RESIZE_320x320(Edited to add ITB weekly chart)1290650?profile=RESIZE_320x320

We chuckle in Chat when we see a fund manager recommend a short (or buy) in an area we've already discussed on site.  Case in point: home builders.

Having a mortgage banking background AND given the current state of low wage job creation, I could not agree more with Doubline's Gundlach.  Increasingly big business lobbyists are pushing for the Obama Administration to increase the number H-1B visa issuance, stating that the U.S. doesn't have the skilled workers needed to fill their need.  In truth are they merely pushing for a cheaper, more pliant labor?  That's an entire debate on it's own but I also think the charts are signalling future weakness as I recommended shorting TOL and PHM in April.

1290657?profile=RESIZE_320x320CLICK ALL CHARTS TO ENLARGE

1290665?profile=RESIZE_180x180You have cash buyers (top/left) buying up bank foreclosures to help with not only their balance sheet, but with existing inventory..............but NEW, first-time home buyers?  Their credit scores are still decimated from the credi

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