Is Single Family Rental Rate Growth Decelerating in the Back Half of 2022?
The September run-up in interest rates currently has the conventional 30-year mortgage rate trending near 6.5%.
The spike in mortgage rates has only put more pressure on the affordability picture, with renting continuing to be the more attractive option relative to purchasing a home. As a result, this dynamic continues to fuel strong demand for rentals and persisting strength in leasing momentum for the single-family REITs.
Even after going through a strong peak leasing season, the single-family REITs continue to operate from a position of strength. The persisting record low turnover rates have kept occupancy levels near historical highs, as many residents are opting to renew leases over testing the market with the risk of signing at a higher market rental rate.
The strong leasing momentum could present more revenue upside potential if seasonality on new lease rates does not return in full force.
Cambashi highlighted the interesting key trends in the market: 1) Energy and labour cost inflation, grid upgrades, and supply chain digitalization could continue driving ongoing software demand. 2) Software penetration of construction workers & managers continues to present Building Information Modeling (BIM) opportunities. 3) The Manufacturing Operations Management (MOM) market and Industrial IoT/connected applications space continues to face positive outlook.
Cable investors have not only faced operators' broadband subscriber growth evaporating over the past 5 quarters, but also debates over the cost and effectiveness of upgrading Cable operators' hybrid fiber-coax ("HFC") plants to the next generation of network technology, DOCSIS4.0. Douglas Mitchelson and Grant Joslin examine the current state of the DOCSIS ecosystem through interviewing cable industry suppliers and executives, attending industry shows, and touring a large cable operator's Network Operations Center.
While luxury may be more resilient than other consumer categories, growth is being intensely scrutinized. Entering an uncertain macro period could likely mean a potential near-term risk to consumer habits and spending. Therefore, we believe companies that have a diverse portfolio, strong brand equity, and a higher exposure to soft luxury, as it is typically more defensive in a downturn vs. hard luxury, will be better positioned in the near term.