We recently compiled a list of the 12 Best REIT Stocks to Buy Now. In this article, we are going to take a look at where AvalonBay Communities, Inc. (NYSE:AVB) stands against the other REIT stocks.
The US Real Estate So Far in 2025
While the mortgage rates have risen despite the Fed cutting rates, potential homebuyers are left with the choice to either postpone the homebuying or resort to current mortgage rates as well as elevated home prices. According to Freddie Mac, the 30-year fixed mortgage rate went above 7% in the week ended January 16. Experts are convinced that mortgage rates need to drop to 6% or lower for the housing market to come to life and rates above 7% deem the market dead where nobody is going to buy. Lee Baker, a member of CNBC’s Financial Advisor Council, reiterated the adverse situation saying:
“If what you’re hoping or wishing for is an interest rate at 4%, or housing prices to drop 20%, I personally don’t think either one of those things is remotely likely in the near term”
Another issue of concern has been the devastating wildfires in LA which have deepened its already existing housing shortage. Redfin reported that almost one of every six homes within the perimeters of the Palisades and Eaton fires have either been damaged, destroyed or are inaccessible. Meanwhile, the prices in the rental markets with more displaced turning to them.
According to the New York Times, the affectees would find it hard to find accommodation in a metro area that already had a shortage of around 337,000 homes, as of 2022. Data from the Los Angeles Department of Building and Safety reveals that apartment units approved by the city of Los Angeles dropped to a 10-year low in 2024. Victor M. Gordo, the mayor of Pasadena, exclaimed the issue at hand as follows:
“One of the biggest challenges ahead will be getting people who lost their homes into permanent, long-term housing”
Our Methodology:
In order to compile a list of the 12 best REIT stocks to buy now, we first use a stock screener to make an extended list of the relevant companies with the highest market caps. Moving on, we shortlisted the top 12 stocks from our list which had the highest number of hedge fund holders. The 12 best REIT stocks to buy now have been arranged in ascending order of their hedge fund holders as of Q3.
At Insider Monkey we are obsessed with 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).
An aerial view of a bustling metropolitan area with high-rise buildings and busy streets.
AvalonBay Communities, Inc. (NYSE:AVB)
Number of Hedge Fund Holders: 35
Avalonbay Communities, Inc. (NYSE:AVB) is a leading multifamily REIT that develops, redevelops, acquires, and manages distinctive apartment homes in the US. It focuses on metropolitan areas with less housing affordability, a vibrant life quality, and strong employment growth. Avalonbay owned or held a direct or indirect ownership interest in 305 apartment communities in 12 states and the District of Columbia, as of September 30.
Avalonbay serves as the largest publicly traded multifamily REIT and has shown 30 years of growth as the industry leader. The REIT continues to evolve to deliver superior growth as it optimizes its portfolio increasing allocation to suburbs and expansion regions and advances towards a $10 million incremental NOI for 2024. While its same-store portfolio performed well through the peak leasing season, the outlook for 2025 remains favorable supporting a healthy same-store revenue growth outlook.
While Avalonbay Communities, Inc. (NYSE:AVB) has beaten the consensus estimate in each of the last four quarters, it is to reveal its fiscal fourth-quarter earnings for 2024 on January 29. Regarding the upcoming results, analysts expect the company to report a profit of $2.82 per share on a diluted basis, up 2.9% from the year-ago quarter. Previously, the firm’s third-quarter FFO and revenue surpassed Wall Street estimates.
Overall AVB ranks 8th on our list of the best While we acknowledge the potential of AVB 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 AVB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
