We recently published a list of 10 Best Residential Real Estate Stocks To Buy. In this article, we are going to take a look at where Equity LifeStyle Properties, Inc. (NYSE:ELS) stands against other best residential real estate stocks to buy.
Home Buyers Have More Bargaining Power than Sellers, Says Economist
The rate hikes which started in March 2022 as a battle against inflation are coming to an end as the Federal Reserve finally decided to cut rates for the first time since 2020. The rate cuts were kicked off with a half-percentage point reduction on September 18. This long-awaited move lowered rates to about 4.875%, at the midpoint. With an optimistic view in mind about inflation cooling off, the big rate cut will be catering to the employment slowdown. The news just doesn’t end here since the officials have pointed to another half-point reduction before the year’s end.
For the housing market, the big rate cut could be taken as a signal from the Fed to reverse the mortgage lock-in effect but the extent of easing matters. While an aggressive reduction in rates will reduce financing costs, create an inventory of existing homes, and reduce pressure on home prices, a gradual reduction won’t be of much value for the homeowners who are holding on to their early-pandemic low mortgage rates. The anticipation of a rate cut at the September Fed meeting has brought down mortgage rates to as low as their lowest since February 2023. However, the dropping mortgage rates are a double-edged sword as they could potentially raise the demand so much thereby making home buying even harder.
In an interview with CNBC, Senior Economist Orphe Divounguy from Zillow emphasized the impact of rate cuts on housing affordability. Although affordability remains a challenge, the market is improving. In his opinion, the best time to act for home buyers is right now as the current scenario offers them a perfect entry point with more options and bargaining power being somewhat shifted from the sellers to the buyers. The number of active listings on the real estate platform has gone up by 22% since last year. Although short-term rates are expected to decline, longer-term rates like mortgage rates could remain at the current level. He expects more buyers than sellers in the market with improving affordability. Sellers will also be in good shape as well-priced and well-marketed homes are selling in just 20 days, according to company data.
With that being said, let’s move to the 10 best residential real estate stocks to buy.
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An iconic residential property, symbolizing the company’s industry focus on REIT–Residential.
Equity LifeStyle Properties, Inc. (NYSE:ELS)
Number of Hedge Fund Holders: 32
Equity LifeStyle Properties, Inc. (NYSE:ELS) is a residential real estate investment trust based in Chicago. The company owns and operates a portfolio of manufactured home communities, rental homes, and RV campgrounds across the United States. The REIT offers housing options and vacation opportunities in some of the most desirable housing markets and vacation destinations in the country.
Over the 50 years in business, Equity LifeStyle Properties, Inc. (NYSE:ELS) has transformed the image of the site-set housing industry. The firm has a strong national presence and a commendable industry reputation. While its presence in 35 states and British Columbia mitigates the risk of economic downtown in a specific area, it results in a strong brand awareness of the company’s commitment to the high end of the market. Additionally, the company’s properties stand extremely valuable since they are one-of-a-kind and positioned where such developments can’t be built anymore.
Equity LifeStyle Properties, Inc. (NYSE:ELS) has one of the country’s largest real estate networks with 450 properties with 171,477 sites in 35 states and British Columbia. The firm is currently demonstrating performance that exceeds expectations. For the first six months of 2024, the company reported a 6.4% increase in net operating income. Driven by the continued strength in annual revenue and reduced expenses throughout the portfolio, normalized FFO growth of 5.9% year-to-date was recorded.
The high-quality portfolio of premier communities, prominent history in the site-set housing industry, and a strong balance sheet make the Equity LifeStyle Properties, Inc. (NYSE:ELS) attractive. As of Q2, the stock is held by 32 hedge funds. Balyasny Asset Management is the largest shareholder in the company.
Overall, ELS ranks 10th on our list of 10 best residential real estate stocks to buy. While we acknowledge the potential of ELS as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than ELS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.