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Equity Residential: High Coastal Exposure Has Hurt Investors

Apr. 25, 2023 9:00 AM ETEquity Residential (EQR)13 Comments


  • The Equity Residential, as the name implies, invests in single and multi-family housing, mainly on both US coasts.
  • The article gives a brief overview of the US housing market as that drives construction costs and potential for increasing income from existing properties.
  • That is followed up by a review of EQR itself. Despite the recent slowdown in the residential market, owning real estate is a good portfolio diversification asset.
  • While EQR is expanding away from the coasts, there are other REITs already focused there that have outperformed EQR. At best, EQR is a hold hoping for better results going forward.
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Apartment buildings in a residential area


(This article was co-produced with Hoya Capital Real Estate


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This article was written by

Retired Investor profile picture

Retired Investor has been investing since the 1980s and has a background in data analysis and pension fund management. He writes articles to help others prepare for retirement by investing in CEFs, ETFs, BDCs, and REITs. He is a long only investor and shares strategies for trading options with a focus on cash-secured-puts.

He is a contributing author to the investing group Hoya Capital Income Builder. Hoya specializes in the portfolio management of publicly traded real estate securities and dividend ETFs. Learn more.

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Comments (13)

Pretty strong results reported yesterday and solid outlook. The west coast is anti landlord but the positives are they are high barrier to entry markets and EQR’s renters are not likely to be losing their jobs nor leaving for Texas.

The stock is undervalued but the markets right now hate anything that they think have recession exposure. ARE is a steal and also reported a strong 1Q with a good outlook but investors apparently are convinced its going to face challenges from biotech funding issues and possible competition from desperate office space, both of which are likely not to happen or will have minimal impact.
Retired Investor profile picture
@ccking3 Thanks for sharing. Others readers agree. I own some ARE, down a ton, makes little sense.
tensei profile picture

yeah california and new york are great markets for the "go-getter" talent that are making $200k+ salaries that EQR caters to. It is not in the realm of possibility that they are moving to texas, alabama or some other low cost of city.
Sam Sell as top dog is same as to clone Warren Buffet for real estate. Besides Warren is not a Club Harley rider. Long Sam
tensei profile picture
EQR residents in NYC and California are not moving to sunbelt cities. A finance person making $200k-300k in NYC in an EQR apartment cannot find a comparable job anywhere in the United States, especially in the sunbelt....
Retired Investor profile picture
@tensei That assumes they cannot WFH. Plus, they could take a big pay cut and still be better off. I when I started in TX, I got paid 50% of what a fellow grad got from NYC firm. I had lower taxes, fraction of the rent, and 15 minute commute.
tensei profile picture
@Retired Investor

Again, I don’t think you understand the target market for EQR residents. They are people earning over $150k that want to big in a big city.

It doesn’t matter how cheap texas is, they are unwilling to move there as the clubs/restaurants/friends are not there…also the highest paying finance jobs are in NYC, biotech in Boston, tech in Silicon Valley… these are not your “I’m gonna settle for a second rate Finance or tech job at a smaller city” kind of people
Retired Investor profile picture
@tensei Not arguing that point, but people are moving out of costly cities, especially if their employer moves. Granted, I do not have data as to what income brackets are most effected.
It's be more useful to do a deeper comparison of the six you included at the end of your article. Thanks!
Retired Investor profile picture
@mliu76400 I don't think SA would allow too much depth on the others but all have been recently reviewed by others. Good question though, thanks.
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