Multifamily Reits had some good news in the third quarter of 2008—more renters than ever are staying in their units.
Camden Property Trust, a Houston-based REIT, saw its move-outs for home purchases fall to an all-time low of 13.6 percent, after peaking in 2004 at 24 percent. UDR, a Highlands Ranch, Colo.-based REIT, saw its move-outs drop from 15.5 percent in the same period last year to 13.1 percent this year.
“Homeownership is at historical lows,” says Christopher Wimmer, a vice president and senior analyst for New York-based Moody's Investors Service. “People are worried about the economy and their jobs, and they don't see [buying a home] as a good idea at this point.”
AvalonBay Communities, a REIT based in Alexandria, Va., saw fewer than 20 percent of its residents move out to buy homes. That's low for the luxury operator. Meanwhile, Home Properties, a REIT based in Rochester, N.Y., that has lower-priced apartments, saw only 12.4 percent of its renters leave to buy homes.
“These are the lowest numbers we've seen in three years,” says Charis W. Warshof, Home's vice president of investor relations.
As layoffs pile up, most people guess that keeping renters disinclined to buy will not off set increasing unemployment.
“We do expect 2009 to be a challenging year,” says David J. Neither-cut, president and CEO of Chicago-based Equity Residential, which saw its move-out rates fall to 5 percent.