Tickers in this Article: AIV, EDR, EQR, ACC
Overall headline numbers for housing continue to worsen. And according to the most recent data from the S&P/Case-Shiller price index, housing has officially entered a double dip. During the first quarter of 2011 U.S., home prices fell in the first quarter to a new recession low. According to the Shiller index, home prices fell by 4.2% in the first quarter of 2011 and down 5.1% from a year ago. Even more so, in many parts of the U.S., residential real estate prices are lower today than they were nearly 10 years ago.

TUTORIAL: Exploring Real Estate Investments: Introduction

A Silver Lining
Amidst the terrible headline numbers, student residential real estate appears to be holding its own. Thanks to continued strong enrollment in colleges across the country, the demand for student housing is stable. New student housing development and sales of such properties continues to increase. With more and more Americans pursuing an education in order to secure a job amidst high unemployment, student housing developers could continue to do well over the next few years. (For related reading, see How Education And Training Affect The Economy.)

The biggest player in the industry is American Campus Communities (NYSE:ACC), a student housing real estate investment trust. Shares yield a decent 3.9%. ACC owns and manages 137 properties and over the past year has returned 30% to investors, easily outperforming any other real estate investment class. At the current share price of about $34, the stock sports a P/E of around 62 but that is likely based on depressed earnings. On a forward earnings basis, shares trade for 18-times earnings.

Necessary Expense
Student housing is a necessity for the vast majority of college students who aren't living at home while in college. So for the duration of one's stay in college, student housing is a necessary expense. That condition offers a stable tenant base for student housing developments. Education Reality Trust (NYSE:EDR) is a small cap REIT focusing on the student housing market. For a REIT, the yield is an unimpressive 2.4%. Shares in EDR are up over 30% in the past year as investors have come to appreciate the resiliency of student housing.

In fact, investors seem to be gravitating towards rental property REITS. Apartment Investment & Management Co (NYSE:AIV) which focuses on traditional rental apartments is up 30% over the past 52 weeks. At current valuations, the shares trade for a very rich 8.5-times book value, and the yield is a very unattractive 1.8%. The largest residential REIT, Equity Residential (NYSE:EQR) trades close to its 52-week high of $61 and that has depressed the yield to 2.2%, respectively. (For related reading, see College Dorms: Good Value Or Ripoff?)

Bottom Line
An above average dividend yield is a principal attraction of real estate investment trusts. Over the past year, investors have flocked to rental REITs as more people have been forced into renting as a result of the housing crisis. Student housing is slightly different because of the constant need for it as people move on to college. Even so, those yields have also come down as investors have pushed prices up. (For more, see How To Analyze Real Estate Investment Trusts.)

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