The US single-family housing market is an attractive asset class for long-term investment. Demand for homes continues to increase due to population growth and millennial family formation, while supply has remained stagnant since the GFC of 2008. Housing starts have been consistently below historical levels, creating a deficit of 2-5 million single-family homes, and providing tailwinds for investors seeking above-market, inflation-protected returns.

Not all markets will share equally from the current supply/demand imbalance. In markets where speculators have already driven up home prices, future growth is likely priced in. Hence we invest more conservatively in primary markets. In contrast, we believe investor have a larger margin of safety in strong secondary markets that have robust job and wage growth but where housing prices remain affordable.