The relationship between rents and incomes remains near the 20-year average from Seattle to Southern California, Essex Property Trust (ESS +0.2%) chief Michael Schall tells SNL Financial. "When you start pushing those ratios, strange things happen in the marketplace," but it's not happening now, partly because personal income growth is so much stronger in the West than the rest of the country.
And why is this? To put it simply: Poorer people are moving away, skewing income to those with high-paying, high-tech jobs.
As for whether Essex has any interest in Midwest-exposed Associate Estates (AEC) - where an activist is pushing for a sale - Schall (who has firsthand experience with that activist) isn't interested in that part of the country. "I think that we're a consolidating business, and I would expect consolidation to continue within the (West coast) space.