Benzinga·2025-09-17 17:06Core Viewpoint - Goldman Sachs analyst Julien Blouin expresses caution regarding the residential REIT sector, highlighting challenges for the second half of 2025 and into 2026 due to weaker job growth, slowing migration trends in Sunbelt markets, and rising supply forecasts [1][8][10] Company Summaries - Camden Property Trust (CPT): Downgraded to Sell with a price forecast of $106, down from $118, due to persistent vacancy and supply issues in Sunbelt markets. Expected rent growth for 2026 is only +1.4%, significantly below management's guidance of over 4% [2] - American Homes 4 Rent (AMH): Downgraded to Neutral from Buy, with a price forecast of $37, down from $43. Analysts note a weaker home-selling environment is creating "shadow supply," impacting rent growth through 2026 [3] - Invitation Homes Inc (INVH): Remains the only Buy-rated stock, though price forecast trimmed to $36 from $37. Analysts believe INVH's scale and relative valuation position it better than peers despite moderating rent trends [4] - Mid-America Apartments Communities Inc (MAA): Maintained at Neutral with a price forecast cut to $148 from $163. Updated rent growth models led to the reduction, although lower same-store expenses provided some offset [5] - Equity Residential (EQR): Also rated Neutral, with a slight price forecast reduction to $70 from $72. Key headwinds include softening trends in Washington, D.C., and Boston submarkets [5] - Essex Property Trust Inc (ESS): Rated Neutral, with a price forecast nudged up to $291 from $288. Projected sector-leading rent growth in 2026-2027 is tempered by near-term challenges in Los Angeles submarkets [6] - UDR Inc. (UDR): Maintained at Sell with a price forecast of $37. Analysts cut second-half 2025 lease growth projections due to rising vacancies and slowed rent growth in Washington D.C. and Boston [7] Sector Insights - The residential REIT sector is facing headwinds from persistent supply growth and decelerating migration, particularly in Sunbelt markets, which have absorbed record volumes in recent years [8] - Rent growth expectations for 2026 may be overstated, with subdued performance anticipated in key markets like Houston, Dallas, and Phoenix. Coastal markets, particularly Washington D.C. and Boston, are expected to weaken further [9] - The sector is experiencing one of the weakest job growth environments outside of a recession, limiting demand from significantly outpacing supply [10]