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A real estate play that captures the ongoing housing boom and hedges against rising rates


A home on Casaba Ave. in Canoga Park that Invitation Homes recently bought, fixed up and turned into a rental property.

Mel Melcon | Los Angeles Times | Getty Images

An area of the housing market that’s booming because of the pandemic-spurred revival of the suburbs may also be a place for investors to turn to amid recent fears of rising rates.

Single-family rental REITs are publicly traded real estate companies that focus on providing single-family homes to Americans who want to rent, compared to own, a house.

The securities benefit from the de-urbanization trend and they could be a hedge against rising mortgage rates as well. When interest rates rise like they are now, the housing market can often cool as fewer buyers get financing. REITs will often see weakness during times of rising rates because of the real estate market impact and because higher yields weaken the attractiveness of the group’s payouts.

But this part of the market could benefit in that environment as families flock to the single-family rental space because of the higher rates.

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