Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Real Estate Stocks: Popular Bets For Investors In Search Of Yield 

By Investing.com (Haris Anwar/Investing.com)Stock MarketsJul 01, 2021 06:38
uk.investing.com/analysis/real-estate-stocks-popular-bets-for-investors-in-search-of-yield-200484281
Real Estate Stocks: Popular Bets For Investors In Search Of Yield 
By Investing.com (Haris Anwar/Investing.com)   |  Jul 01, 2021 06:38
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

The U.S. housing market is on fire these days. Home prices jumped the most in more than 30 years in April, according to S&P Case-Shiller Index data released Tuesday. That came after a 13.2% increase in March. April was also the 11th straight month that price gains accelerated.

After these eye-popping increases, there are solid reasons to believe that the country’s housing market will remain strong for many years to come. Low interest rates and the pandemic-driven shift to living in the suburbs are adding to the housing shortage, pushing prices higher.

“The forces that have propelled home price growth to new highs over the past year remain in place and are offering little evidence of abating,” said Matthew Speakman, an economist at Zillow Group.

“The number of available homes for sale remains historically small, particularly given the elevated demand for housing.”

To benefit from this robust activity in the real-estate market, investors are shifting their funds to companies best positioned to thrive in this environment. The S&P 500 Real Estate index, for example, is up 22% this year, double the rise of the broader index.

IYR Weekly Chart.
IYR Weekly Chart.

Real estate exchange-traded funds are also attracting investors' cash. The iShares U.S. Real Estate ETF (NYSE:IYR) posted $1.3 billion of inflows in the first week of June.

VNQ Weekly Chart.
VNQ Weekly Chart.

The $75-billion Vanguard Real Estate Index Fund ETF Shares (NYSE:VNQ) posted $1.2 billion of inflows in May, according to Bloomberg data.

Inflationary Fears

Another reason making real-estate stocks a bet worth taking is the fear of inflation in the post-pandemic world. As the economy reopens and people resume their normal lives, there is a possibility that inflationary pressures will escalate.

If that happens, it could erode company profits and force the Federal Reserve to hike interest rates sooner than expected. In that environment, investors could get higher yields from real estate investment trusts (REITs), companies that manage large apartment buildings, commercial real estate or malls.

Consumer prices rose 5% in May from a year earlier, according to the U.S. Labor Department, the biggest surge in inflation in nearly 13 years. Federal Reserve officials signalled last month that they expect to raise interest rates by late 2023 as inflation picks up.

Simon Property Group Weekly Chart.
Simon Property Group Weekly Chart.

Shares of Simon Property Group (NYSE:SPG), America's largest mall operator, which has seen its shares gain more than 50% this year, are yielding more than 4%.

Brookfield Property Partners Weekly Chart.
Brookfield Property Partners Weekly Chart.

Similarly, Brookfield Property Partners (NASDAQ:BPY), which manages office, retail, multi-family housing and industrial assets globally, is offering an annual yield of about 7%. The yield on the benchmark 10-year U.S. Treasury note is just below 1.5% at time of writing.

Bottom Line

In a low-rate environment when housing demand remains strong, real estate stocks will continue to benefit. Investors could buy some of the top quality REITs that offer decent yields and a potential of capital gains to take advantage of this trend.   

Real Estate Stocks: Popular Bets For Investors In Search Of Yield 
 

Related Articles

Real Estate Stocks: Popular Bets For Investors In Search Of Yield 

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email