DA Davidson believes that now is the time to invest in multifamily REITs. In a new report, analyst Steve Shaw discusses the improving fundamentals of multifamily REITs, which area of the U.S. is the hottest region right now and which names are DA Davidson’s top picks.

Supply And Demand

According to Shaw, the current supply/demand balance looks very favorable for multifamily REITs. Rebounding job growth continues to drive demand for apartments. Another key component of the short supply of residencies is the lack of construction. The imbalance between job growth and construction has driven occupancy rates higher, which benefits REITs.

DA Davidson monitors a statistic called home ownership penetration rate. This rate peaked at over 69 percent during the height of the U.S. housing bubble, but has finally returned to its historical average of 63-64 percent.

Shaw notes that a one percent drop in ownership penetration rate equated to 1 million additional renters.

The ‘Smile Of The U.S’

DA Davidson prefers…

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