AMH - American Homes 4 Rent: Right Product For The Times But Fairly Valued
2024-05-21 23:45:59 ET
Summary
- American Homes 4 Rent is one of the largest landlords in America, with a portfolio of ~58,000 single-family homes.
- Renting single-family homes appears to be ideally suited for the current environment when resale inventories are low, and there is an acute housing shortage.
- While I like AMH's business model, I believe the company is fairly valued at the moment and would look for a pullback to reassess.
According to conventional financial wisdom , it is generally cheaper to own than to rent, especially since monthly payments can go towards paying down the mortgage and building equity. Homeownership has been the easy path to wealth for many Americans over the past few decades.
However, with mortgage rates near multi-decade highs at ~7% (Figure 1) and persistently high home prices, that advice is being flipped on its head as affordability is at multi-decade lows. According to a study by GOBankingRates , it is now cheaper to rent vs. buy in a majority of America's 50 states (although the study does not take into account the equity built through homeownership)....
American Homes 4 Rent: Right Product For The Times But Fairly Valued