Big players in the real estate industry, especially in the rental business, have been trying out a new strategy - merging operations. However, Wallstreet is not responding well. But real estate analysts say that it is still a growing industry.
American Residential Properties (ARPI), an Arizona-based real estate company, merged with California-based American Homes 4 Rent (AMH). ARPI has a total of 8938 rental homes and AMH owns 38, 377. According to , this is the third merger this year. However, things are not as positive as they should be. AMH shares were down nearly 5 percent at the close on Thursday when the announcement was made.
Although the shares of AMH has not been responding properly, it seems like the amount of single family homes that are converted into rental homes have been increasing since 2006. In fact the number has already increased by 35 percent since then.
Real estate investors have been buying distressed properties like the single family homes, according to CNBC. And the nation’s home ownership rate is now at is lowest in 50 years. And they still are positive that the rate will remain low as years pass by.
The affordability of home rentals compared to owning a home is seen as one of the many reasons why rental profits are still on the boost despite what Wallstreet may think.
Moreover, the attitude of millennials which now makes up to 83.1 million according to the U.S. Census Bureau, towards home ownership is also taken to consideration.
In fact, Millennials is the most diverse and educated generation. However, they are also faced with economic challenges such as the Great Recession which delayed some of their life’s milestones. Due to this and other reasons, millennials have preferred renting than owning a family home. In fact, millennials are not infatuated with big homes. They are more into minimal homes, but prefers to see and travel the world, as posted here.
With those points taken to consideration, it is safe to say that home rental businesses will still be on the right track.
Do you think that rental profits are really still growing?
