2 REITs For The Affordability Crisis

Market Overview - The average home price in the United States has increased to over $360,000, a 77% rise from $203,000 in April 2016 [1] - As of July 31, 2024, the median sale price is $361,500, with a median list price of $405,933 [2] - The current 30-year fixed mortgage rate is approximately 6.5%, up from below 4.0% in 2016 [2][4] Affordability Crisis - The housing affordability index is at its worst since the mid-1990s, even worse than before the Great Financial Crisis [3] - The average monthly payment for a 6.5% mortgage is about 43% of the average salary of a full-time employee in the U.S. [4] - Proposed solutions to the affordability crisis include building 3 million homes and providing down payment assistance of $25,000 for middle-class Americans [4] Invitation Homes Inc. (INVH) - Invitation Homes owns approximately 85,000 homes in 16 core markets, focusing on high-growth areas [6][7] - The company benefits from a housing shortage of 2 to 4 million homes, which supports pricing power [6] - INVH expects to grow its same-store NOI by at least 3.75% this year, with a dividend yield of 3.1% and a payout ratio of 61% [13][14] Sun Communities, Inc. (SUI) - Sun Communities operates manufactured housing communities that are 97% occupied, providing affordable living options [16] - The company has a strong investment-grade balance sheet with no significant maturities until 2026 [18] - SUI offers a dividend yield of 2.8% with a healthy payout ratio of 53% and a five-year CAGR of 5.1% [19] Investment Outlook - Both Invitation Homes and Sun Communities are well-positioned to benefit from the ongoing affordability challenges in the housing market [22] - These companies provide solid growth opportunities and attractive dividends, making them compelling options for investors seeking capital appreciation and income [22]