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e've compiled a list of the 10 best real estate and realty stocks to buy according to hedge funds, with AvalonBay Communities, Inc. (NYSE:AVB) being one of them. In this article, we'll examine where AVB stands among other real estate and realty stocks.

    The recent US presidential election has sparked concerns about the country's housing affordability crisis, with President Trump blaming illegal immigration for the issue. However, economists argue that reducing immigration could harm the labor supply needed for new homebuilding, as up to a third of residential construction employment consists of foreign-born workers. Additionally, Trump plans to cut regulations and permit requirements that add unnecessary costs to new homes, but economists believe this won't solve the entire housing crisis.

    Mortgage rates have surged since the election, with the 30-year fixed mortgage rate rising to 6.98%. This is attributed to investors forecasting stronger economic growth and higher inflation, which drives up 10-year Treasury bond yields. Trump's economic agenda could lead to a surge in mortgage rates due to increased inflation and government debt.

    Doug Bauer, CEO of Tri Pointe Homes, believes that lower corporate tax and easing regulations for banks are positives for the US housing market. However, he notes that the core issue remains supply, with many regulations pulling back land that could be utilized to build affordable housing. Ivy Zelman, Zelman and Associates CEO, agrees that the housing market weakness is at the entry level, while the move-up market remains strong.

    To compile our list of the 10 best real estate and realty stocks to buy according to hedge funds, we used a stock screener to make an extended list of relevant companies with high market caps. We then shortlisted the top 10 stocks with the highest number of hedge fund holders.

    AvalonBay Communities, Inc. (NYSE:AVB) ranks 10th on our list, with 35 hedge fund holders. The company is a leading multifamily real estate investment trust that develops, redevelops, acquires, and manages distinctive apartment homes in the best US markets across 12 states and Washington, DC. AVB has a well-established portfolio focused on coastal markets that have delivered solid same-store net operating income growth.

    For the third quarter, AVB's Core FFO per share grew 3% year-over-year, while EPS climbed 115.7% over the year. The company completed the development of two communities and started construction on four apartment communities. While we acknowledge the potential of AVB as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns within a shorter timeframe.