Cramer: The Bull Market In Rental Is Ending
The “raging” bull market in rental apartments may soon come to an end, Cramer said Thursday, because affording housing is allowing renters to become homeowners.
For some time, the apartment rental market was booming. The many foreclosures across the country coupled with a “totally moribund” housing market caused many Americans to rent instead of buy, Cramer explained. In turn, investors made a lot of money in real estate investment trusts that own apartment buildings.
Today, however, housing has become very affordable. According to its monthly housing affordability index, the National Association of Realtors said the typical family has more than double the income needed to buy the median-priced home. In the 42 years the organization has kept records, it said the affordability index has never been so high.
“Regular viewers know that I've been predicting a 2012 housing bottom for years, and I stand by that prediction more than ever right now,” Cramer said. “We've got mortgage rates near record lows, housing affordability levels at all-time lows, and now that employment is picking up, that gives us just the boost we need to get lots of people buying houses again.”
While this news is great for the economy, it foreboding for the apartment REITs. In turn, Cramer recommends taking profits on these stocks.
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