In this article, we are going to discuss the 10 best residential real estate stocks to buy. You can also check out the 25 Fastest Growing Real Estate Markets in the World.
Residential real estate has become one of the most popular types of real estate investment in recent years. In 2024, the residential real estate market reached a valuation of $11.14 trillion. The market is expected to expand at a compound annual growth rate (CAGR) of 6.07% to reach a value of almost $15 trillion by 2029.
One of the main drivers of this growth is urbanization. People are moving from small towns and rural areas to cities to improve their standard of living and integrate into the modern world. Around 4.4 billion people, or 56% of the global population, currently live in cities. By 2050, it’s expected that about 70% of people will reside in urban areas.
Even though more resale homes are hitting the market, the inventory shortage is still high and is expected to continue due to several factors. One major issue is that many homeowners are “locked in” with low mortgage rates and are reluctant to exchange at higher rates in the current expensive market. As a result, demand continues to exceed the supply of homes.
Rick Sharga, founder, and CEO of CJ Patrick Company, a market intelligence and business advisory firm, predicts that we won’t see a significant increase in the supply of existing homes for sale until mortgage rates drop back to the low 5% range, which likely won’t happen until after 2024.
However, the market outlook is not that bleak. There is optimism that both property buyers and sellers are adjusting to a sustained period of higher interest rates. With consensus on pricing, there is hope that the real estate market can rebound from one of its most severe downturns in years. A significant recovery in activity is expected more strongly in 2025 than in 2024.
Andrew Alperstein of PwC US also thinks that despite the economic challenges and difficulties in accessing credit, there are opportunities in the market for top-tier properties that align with the demands of today’s investors. Companies need to adjust their growth strategies to perform well in this period of higher interest rates. Another Global Investment Manager at PwC commented:
“While event risk remains high, 2024 appears to be a pivot point, moving towards greater liquidity in real estate markets. Though there are good reasons why investors have been hesitant, we’re moving towards a period where there’s greater clarity. It should be an opportune time to buy.”
With this context in mind, let’s take a look at some of the best residential real estate stocks to buy in 2024.
Our Methodology
For this article, we conducted an analysis of our database of 919 hedge funds as of Q1 2024. From this extensive dataset, we selected the best residential real estate stocks based on the hedge fund sentiment. The top residential real estate stocks have been ranked in ascending order of the number of hedge funds holding a stake in them as of the first quarter of the year. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Residential Real Estate Stocks to Buy
10. Apartment Investment and Management Company (NYSE:AIV)
Number of Hedge Fund Holders: 18
Value of Hedge Fund Holdings: $228,622,000
Overall, 18 hedge funds reported owning a stake in the company at the end of Q1 2024. Apartment Investment and Management Company (NYSE:AIV), also known as AIMCO, was founded in 1975 by Terry Considine. The company focuses on real estate investment primarily in multifamily properties across targeted markets such as Colorado, Denver, South Florida, and the Washington DC metropolitan areas.
In the first quarter of 2024, Apartment Investment and Management Company (NYSE:AIV) reported rental and other property revenues of $50.2 million, slightly below the estimated $50.8 million. Meanwhile, the company’s net operating income grew by 6.5% YoY to reach $27.1 million. This growth was fueled by a 5.4% increase in the average monthly revenue per apartment.
Investors are bullish on Apartment Investment and Management Company (NYSE:AIV) due to the company’s 97.9% occupancy rate and strategic focus on risk management and maintaining adequate cash reserves.
As of Q1 2024, Apartment Investment and Management Company (NYSE:AIV) holds $121.8 million in cash in hand, $18.6 million in restricted cash, and access to a $150 million revolving credit facility. This is enough to support the company’s ongoing development projects totaling approximately $51 million.
9. Essex Property Trust, Inc. (NYSE:ESS)
Number of Hedge Fund Holders: 24
Value of Hedge Fund Holdings: $127,190,000
Essex Property Trust, Inc. (NYSE:ESS) is a publicly traded real estate investment trust, based in San Mateo, California, United States.
In Q1 2024, Essex Property Trust, Inc. (NYSE:ESS) recorded core funds from operations (FFO) per share of 4.9%. The company’s solid performance has mainly been driven by two factors: limited housing supply and higher rental affordability due to wages rising more quickly than rents in Essex Property Trust’s markets.
In the company’s markets, the median cost of homeownership is 2.5 times higher than renting. Hence, the percentage of turnover due to home purchases has decreased from the historical average of around 12% to just 5% currently.
This trend indicates a strong potential for continued rent growth in Essex markets due to rental affordability. In the first quarter, Essex Property Trust, Inc. (NYSE:ESS) saw a 2.2% increase in blended lease rates, with new leases rising by 10 basis points and renewals by 3.9%.
Analysts have set 12-month price targets for the stock, with an average target of $264.54. The estimates range from a high of $315 to a low of $236. On May 30, Mizuho Securities maintained a Buy rating on Essex Property Trust, Inc. (NYSE:ESS).
8. Apartment Income REIT Corp. (NYSE:AIRC)
Number of Hedge Fund Holders: 24
Value of Hedge Fund Holdings: $225,507,000
Apartment Income REIT Corp. (NYSE:AIRC) is a real estate investment trust that manages a portfolio of over 70 apartment communities comprising over 25,000 units.
The company released its Q4 2023 results on February 9. The fourth-quarter results met expectations and reflected typical seasonal patterns. Revenue increased by 6.2% with an occupancy rate of 97.3%, a 200-basis-point improvement from the third quarter. Meanwhile, new lease signings decreased by 1.1% as the focus shifted to building occupancy and pricing power, while renewals rose by 4.7%. Expenses saw a minor increase of 30 basis points, and net operating income grew by 8.1%.
The AIR Edge remains a key factor in driving the company’s strong performance, with controllable operating expenses for the year rising by just 20 basis points. This efficiency is partly attributed to AIR’s highest-ever retention rate of 62.3%.
Overall, nine analysts recommend holding Apartment Income REIT Corp. (NYSE:AIRC). The price targets range from a low of $34 to a high of $39.12
According to Insider Monkey’s Q1 2024 database, 24 hedge funds were long Apartment Income REIT Corp. (NYSE:AIRC), compared to 20 funds in the prior quarter. Long Pond Capital increased its stake in the company by 43% during the first quarter of the year.
7. American Homes 4 Rent (NYSE:AMH)
Number of Hedge Fund Holders: 26
Value of Hedge Fund Holdings: $425,705,000
American Homes 4 Rent (NYSE:AMH) is a real estate investment trust headquartered in Las Vegas, Nevada. The company focuses on investing in single-family rental homes, offering over 60,000 luxurious, pet-friendly, and move-in-ready properties across the United States.
In Q1 2024, American Homes 4 Rent (NYSE:AMH) reported revenues of $423.56 million and earnings per share of $0.31, surpassing expectations of $418.85 million and $0.16, respectively.
Analysts have evaluated American Homes 4 Rent (NYSE:AMH) stock and provided 12-month price targets over the past three months, resulting in an average target price of $39.5. The price targets range from a low of $36 to a high of $42.
This new average represents an 11% increase from the previous average target of $35.5, indicating a generally optimistic outlook on the stock. Based on recommendations from 12 analysts, the stock is rated as a “Moderate Buy.”
Here’s what Baron Funds said about American Homes 4 Rent (NYSE:AMH) in its Q3 2023 investor letter:
“Following strong second quarter results, we modestly increased our investments in single-family rental REITs American Homes 4 Rent (NYSE:AMH). Demand conditions for rental homes are attractive due to the sharp decline in home affordability; the propensity to rent in order to avoid mortgage down payments, avoid higher monthly mortgage costs, and maintain flexibility; and the stronger demand for home rentals in suburbs rather than apartment rentals in cities. Rising construction costs are limiting the supply of single-family rental homes in the U.S. housing market. This limited inventory combined with strong demand is leading to robust rent growth.
American Homes 4 Rent have an opportunity to partially offset the impact of inflation given that their in-place annual leases are significantly below market rents. Valuations are compelling at mid-5% capitalization rates, and we believe the shares are currently valued at a discount to our assessment of net asset value. We remain mindful that expense headwinds and slower top-line growth could weigh on growth later in 2023 and 2024. We will continue to closely monitor business developments and will adjust our exposures accordingly.”
6. Mid-America Apartment Communities, Inc. (NYSE:MAA)
Number of Hedge Fund Holders: 28
Value of Hedge Fund Holdings: $293,967,000
Mid-America Apartment Communities, Inc. (NYSE:MAA) is a real estate investment trust specializing in apartments located throughout the Southeast and Southwest regions of the United States.
As of March 31, 2024, the company owns 102,661 apartment homes, including those in communities under development, spanning 16 states and the District of Columbia.
In Q1 2024, Mid-America Apartment Communities, Inc. (NYSE:MAA) reported revenues of $543.62 million, surpassing expectations of $540.46 million. The earnings per share (EPS) were reported at $1.03, also exceeding the expected EPS of $1.
Analysts have projected 12-month price targets for Mid-America Apartment Communities, Inc. (NYSE:MAA), with an average target of $141.4. The estimates range from a high of $154 to a low of $130. This new average reflects a 2.5% increase compared to the previous average price target of $137.9.
Out of the hedge funds being tracked by Insider Monkey as of Q1 2024, 28 funds reported owning a stake in Mid-America Apartment Communities, Inc. (NYSE:MAA). Balyasny Asset Management is the leading hedge fund investor in the company.
5. Invitation Homes Inc. (NYSE:INVH)
Number of Hedge Fund Holders: 28
Value of Hedge Fund Holdings: $618,348,000
Invitation Homes Inc. (NYSE:INVH) is a single-family home leasing and management company based in the United States. The company specializes in providing top-notch residential properties that are in convenient proximity to offices, education centers, and transport channels.
The company owns and manages more than 80,000 homes across 16 top American markets. The houses are located in desirable neighborhoods and are integrated with Smart Home Tech to increase client satisfaction. This approach has allowed Invitation Homes Inc. (NYSE:INVH) to achieve an 80% resident retention rate.
In Q1 2024, Invitation Homes Inc. (NYSE:INVH) reported a diluted earnings per share of $0.23. This reflected a YoY increase of 15%. Meanwhile, the company’s revenue was recorded at $646.04 million, up from $624.32 million in Q4, 2023.
Analysts have given Invitation Homes Inc. (NYSE:INVH) an average rating of “Moderate Buy.” Among the analysts, 7 recommend holding the stock, while 6 suggest buying it. The average target price is $37.83, with estimates ranging from a low of $36 to a high of $40.
This new average target price represents an over 7% increase from the current price of $35.31, indicating a generally bullish outlook on Invitation Homes Inc. (NYSE:INVH) stock.
Here’s what Baron Funds said about Invitation Homes Inc. (NYSE:INVH) in its Q3 2023 investor letter:
“Following strong second quarter results, we modestly increased our investments in single-family rental REITs Invitation Homes, Inc. (NYSE:INVH). Demand conditions for rental homes are attractive due to the sharp decline in home affordability; the propensity to rent in order to avoid mortgage down payments, avoid higher monthly mortgage costs, and maintain flexibility; and the stronger demand for home rentals in suburbs rather than apartment rentals in cities. Rising construction costs are limiting the supply of single-family rental homes in the U.S. housing market. This limited inventory combined with strong demand is leading to robust rent growth.
Invitation Homes have an opportunity to partially offset the impact of inflation given that their in-place annual leases are significantly below market rents. Valuations are compelling at mid-5% capitalization rates, and we believe the shares are currently valued at a discount to our assessment of net asset value. We remain mindful that expense headwinds and slower top-line growth could weigh on growth later in 2023 and 2024. We will continue to closely monitor business developments and will adjust our exposures accordingly.”
4. Sun Communities, Inc. (NYSE:SUI)
Number of Hedge Fund Holders: 34
Value of Hedge Fund Holdings: $534,787,000
Sun Communities, Inc. (NYSE:SUI), a publicly traded real estate investment trust, focuses on investing in manufactured housing communities, marinas, and recreational vehicle communities.
In the first quarter of 2024, the company’s core FFO per share stood at $1.19, driven by a 7.9% year-over-year increase in North American same-property net operating income. These first quarter results highlight how high demand and limited supply within Sun Communities, Inc.’s (NYSE:SUI) top-tier portfolio drive stable real property income.
Meanwhile, the same-property net operating income for manufactured housing rose by 8% compared to Q1 2023. This was due to multiple factors such as higher rental rates, increased occupancy, and reduced expenses.
The average price target for Sun Communities, Inc. (NYSE:SUI), based on 9 Wall Street analysts’ 12-month projections issued over the past three months, is $135.56. This average price target suggests a potential upside of over 16% from the current price of $116.45.
Here’s what Third Avenue Management said about Sun Communities, Inc. (NYSE:SUI) in its Q4 2023 investor letter:
“Sun Communities, Inc. (NYSE:SUI) (a U.S.- based REIT invested in manufactured housing, RV resorts, and marinas) sold its 10% stake in separately listed Ingenia Communities (an Australian-based owner of active-adult communities and RV parks), while repatriating the capital and announcing the intention to sell non-core properties within North America. These moves support a “return to core” strategy as the company further streamlines to close the discount to Net-Asset Value (“NAV”) and its closest peer.
The Fund participated in several of these developments, primarily by (i) increasing its position in Ingenia Communities alongside the Sun Communities offering and (ii) agreeing to engage in the Five Point exchange offer, which is expected to close in January 2024. The Fund also increased its position in Sun Communities during the period and trimmed back certain holdings for portfolio management purposes.”
As of the first quarter of 2024, 34 hedge funds reported owning a stake in Sun Communities, Inc. (NYSE:SUI), making it one of the best residential real estate stocks to buy.
3. Camden Property Trust (NYSE:CPT)
Number of Hedge Fund Holders: 36
Value of Hedge Fund Holdings: $771,841,000
Camden Property Trust (NYSE:CPT) was established in 1981 by Richard J. Campo and D. Keith Oden. Headquartered in Houston, Texas, the company ranks as the 14th largest apartment owner in the United States. For 17 consecutive years, it has been recognized on Fortune magazine’s annual list of the 100 best companies to work for.
As of December 31, 2023, Camden Property Trust (NYSE:CPT) owned interests in 176 apartment communities, comprising a total of 59,800 apartment homes across the country.
In the first quarter of 2024, Camden Property Trust (NYSE:CPT) generated $386.19 million in revenue, with a net income of $83.89 million. The net income reflected a year-over-year increase of over 100%. Meanwhile, the net profit margin stood at 21.72%, and the diluted earnings per share (EPS) was $0.77. The diluted EPS recorded a YoY increase of 97%.
According to analysis from 13 Wall Street experts over the past three months, Camden Property Trust (NYSE:CPT) has an average 12-month price target of $108.9, with estimates ranging from a high of $118 to a low of $100. This average target suggests a 2.5% upside potential from the most recent price of $106.2
Camden Property Trust (NYSE:CPT) ranks third on our list of the best residential real estate stocks to buy in 2024.
2. Equity Residential (NYSE:EQR)
Number of Hedge Fund Holders: 36
Value of Hedge Fund Holdings: $867,147,000
Equity Residential (NYSE:EQR) specializes in acquiring, developing, and managing high-quality apartment properties in leading US growth markets. The company is headquartered in Chicago, Illinois, and ranks second on our list of the best residential real estate stocks to buy.
In Q1 2024, Equity Residential (NYSE:EQR) reported revenue of $730.82 million and a net income of $295.79 million, representing a year-over-year increase of over 34%. The net profit margin for this period was 40.47%. Moreover, the diluted earnings per share (EPS) saw an increase of over 37%, reaching $0.77.
Equity Residential (NYSE:EQR) has an average price target of $69.83, according to 14 Wall Street analysts’ 12-month forecasts issued in the past 3 months. The price targets range from a high of $75 to a low of $64. This average target suggests a potential increase of 6.14% from the current price of $65.79.
Here’s what Baron Funds said about Equity Residential (NYSE:EQR) in its Q4 2023 investor letter:
“In the most recent quarter, we re-acquired shares in Equity Residential (NYSE:EQR), the largest U.S. multi-family REIT. The company has assembled an excellent portfolio of Class A apartment buildings located in high barrier-to-entry coastal markets with favorable long-term demographic trends and muted overall supply growth. We believe the company is also well positioned to benefit from the affordability advantages of renting versus home ownership, annual leases that provide the potential for partial inflation protection, and its low levered balance sheet, which positions the company to take advantage of acquisition opportunities.
In our opinion, Equity Residential’s shares are attractively valued relative to private market values and the company owns and operates excellent and relevant real estate that should perform well, long term.”
1. AvalonBay Communities, Inc. (NYSE:AVB)
Number of Hedge Fund Holders: 42
Value of Hedge Fund Holdings: $699,292,000
AvalonBay Communities, Inc. (NYSE:AVB) is a multifamily REIT with 30 years of experience in developing, maintaining, and managing apartment units. The apartments span across 12 American states and Washington DC.
In Q1 2024, AvalonBay Communities, Inc. (NYSE:AVB) recorded core funds from operations growth of 5.1%. This was 350 basis points higher than the company’s previous outlook. Furthermore, the same-store revenue growth rose by 4.2%, which was 90 basis points higher than the previous forecast.
AvalonBay Communities, Inc. (NYSE:AVB) also shared that its developments and lease-ups are experiencing strong absorption rates and recording rents and returns above pro forma expectations.
The average price target for AvalonBay Communities, Inc. (NYSE:AVB) is $207.5, as per the projections of 14 analysts from Wall Street over the past 3 months. Among these, the highest price target is $230, while the lowest forecast stands at $194. On average, this implies a 5.2% upside from the last stock price of $197.2.
At the end of Q1 2024, 42 hedge funds reported owning a stake in AvalonBay Communities, Inc. (NYSE:AVB). Citadel Investment Group was the leading investor in the company, with a stake worth over $141 million.
While we acknowledge the potential of AVB as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AVB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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