3 REITs To Profit From Housing Trends

reitJay Taylor: It’s no secret. A wave of young adults who are living at home with their parents is about to unlock pent up demand for rental housing. As many as 2.5 million additional 18-to-34 year olds will look for housing over the next few years.

This trend will drive the housing market higher and reward investors that are smart enough to get ahead of the trend.

How does one profit from a trend like this?

Simple. Real Estate Investment Trusts – REITs.

More specifically, I have found 3 REITs to profit from housing trends. These top REITs focus on multifamily and apartment housing and are well positioned to reward investors as this section of the housing market rises.

Top REIT #1: Associated Estates Realty Corporation (NYSE:AEC)

AEC is a housing REIT focused on apartment style housing. As of the end of 2013 the company owned 13,676 apartment units in 53 different apartment complexes.

Compared to other housing REITs its price-to-equity (PE) ratio of 21.6 makes the stock seem cheap.

Take, for example, shares of well-known housing REIT AvalonBay Communities (NYSE:AVB). The company trades at a PE of 102 with a yield of 3.34%.

AEC offers a much juicier 4.27% dividend and the company has regularly paid a dividend for 20 years.

The company has a geographically diverse mix of apartment complexes. They are spread across nine states and Washington DC and include the mid-west, Texas, southeast, and mid-Atlantic regions. This includes a strong presence in the Raleigh-Durham region of North Carolina.

With its focus on apartment housing and good geographic diversification, AEC is well positioned to capture its share of the market as 18-to-34 year olds leave home in search of apartments.


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