Balanced Risk/Reward Amid Regulatory and Market Headwinds Supports Hold on Equity Residential

BMO Capital analyst John Kim downgraded the rating on Equity Residential to a Hold today, setting a price target of $68.00.

John Kim has given his Hold rating due to a combination of factors tied to both Equity Residential’s market exposure and its current valuation. He anticipates that operating conditions in EQR’s key coastal markets such as Washington, D.C., New York City, Boston, and Los Angeles will weaken in 2026, pressured by soft job growth, affordability constraints, and growing political and regulatory headwinds including rent control measures and potential tax increases on higher-income residents. At the same time, EQR’s shares are trading at an AFFO multiple that is roughly in line with its peer group, suggesting limited upside relative to the risks he sees ahead.

In Los Angeles, the company’s largest market, ongoing employment losses in the entertainment sector and a higher-than-average unemployment rate point to a more challenging leasing environment. Washington, D.C. is also expected to underperform, with major announced layoffs and third-party projections calling for flat rent growth, which narrows the company’s growth runway. In New York, rising “rent fatigue,” a political shift reflected in the recent mayoral election, and heightened public scrutiny through rental hearings further increase regulatory and reputational risk. Taken together, these macro, regulatory, and valuation considerations lead Kim to conclude that EQR’s risk/reward profile is balanced rather than compelling, supporting his Market Perform (Hold) recommendation.