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As Fed Blinks, Real Estate Rallies In November



  • With the Fed in focus, US equities finished a volatile November on a high note. The S&P 500 finished the month up 1.8%. REITs climbed 4.6% while Homebuilders jumped 4.4%.
  • US interest rates continue to retreat as oil continued its freefall. PCE inflation data was cooler than expected, giving the Fed plenty of wiggle-room to pull back on rate hikes.
  • Retailers got off to a strong start this Holiday season. Early spending data suggests that sales could rise another 4-6% this season following last year’s strong 5% surge.
  • New home sales dipped to a two-and-a-half year low while pending home sales dipped to a four year low as higher mortgage rates continue to slow the US housing market.
  • Home price appreciation continues to moderate following a half-decade of strong growth. Market fundamentals, however, are vastly different than the pre-crisis period in the mid-2000s.

Real Estate Weekly Review

real estate weekly review

On a busy week jam-packed with economic data, trade talks, and Fed-watching, US equities delivered a strong week despite the continued pull-back in oil prices. The S&P 500 (SPY) jumped nearly 4%, boosted by a cooler-than-expected reading on PCE inflation data and signs that the Federal Reserve may be pumping the breaks on rate hike plan. The G20 summit, which began on Friday, will be the central focus of investors throughout the weekend with the China-US trade talks taking center stage.

Plunging oil prices, along with signs of cooling economic growth in international markets, continues to drag down US interest rates and brighten the outlook for the rate-sensitive segments of the US market, including housing. WTI oil prices briefly dipped by $50 per barrel in trading this week, a level that would be unbelievable just six weeks ago. REITs (VNQ and IYR) climbed 2.5% on the week, while Homebuilders (XHB and ITB) rose 1%, each capping off a strong November in which both sectors gained nearly 5%.

real estate housing performance

(Hoya Capital Real Estate, Performance as of 4pm Friday)

The Housing 100, an index that tracks the performance of the US housing industry, finished the week higher by 3%, led by strength in the home improvement and brokerage and technology industry sectors despite mixed housing data. In the home improvement category, Lowe's (LOW) and Home Depot (HD) each jumped more than 6% on the week. In the brokerage and technology sector, Zillow (Z) surged 24%, Redfin (RDFN) jumped 15% and RealPage (RP) climbed 8%. Online furniture retailer Wayfair (W), meanwhile, jumped 20% on the week.

Real Estate Economic Data

real estate economic data

(Hoya Capital Real Estate, HousingWire)

Another Weak Month for Home Sales

A decade after the financial crisis, the US housing markets are again the central focus of global investors. A stretch of

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Hoya Capital profile picture

Real Estate  • High Yield • Dividend Growth

Visit www.HoyaCapital.com for more information and important disclosures. Hoya Capital Research is an affiliate of Hoya Capital Real Estate ("Hoya Capital"), a research-focused Registered Investment Advisor headquartered in Rowayton, Connecticut. 

Founded with a mission to make real estate more accessible to all investors, Hoya Capital specializes in managing institutional and individual portfolios of publicly traded real estate securities, focused on delivering sustainable income, diversification, and attractive total returns. 

Collaborating with ETF Monkey, Retired Investor, Gen Alpha, Alex MansourThe Sunday Investor, and Philip Eric Jones for Marketplace service - Hoya Capital Income Builder. 

Hoya Capital Real Estate ("Hoya Capital") is a registered investment advisory firm based in Rowayton, Connecticut that provides investment advisory services to ETFs, individuals, and institutions. Hoya Capital Research & Index Innovations is an affiliate that provides non-advisory services including research and index administration focused on publicly traded securities in the real estate industry.

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The views and opinions in all published commentary are as of the date of publication and are subject to change without notice. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. Any market data quoted represents past performance, which is no guarantee of future results. There is no guarantee that any historical trend illustrated herein will be repeated in the future, and there is no way to predict precisely when such a trend will begin. There is no guarantee that any outlook made in this commentary will be realized.

Readers should understand that investing involves risk and loss of principal is possible. Investments in real estate companies and/or housing industry companies involve unique risks, as do investments in ETFs. The information presented does not reflect the performance of any fund or other account managed or serviced by Hoya Capital. An investor cannot invest directly in an index and index performance does not reflect the deduction of any fees, expenses or taxes.

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Analyst’s Disclosure: I am/we are long VNQ, XHB, HD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (4)

StevenK1 profile picture
great article. long FREL.
jansdirk profile picture
Yes of course but stock prices are exxagerated punished even in case Brexit will end as a disaster.
It reminds me of An Italian Reit which I have bought at the time for 0,32 and sold a while later for 0,75 which appeared to be a fair price during a number of years now: Beni Stabili Spa
Thanks Good luck in UK!
Duc1198 profile picture
@jansdirk. Nio fear or Britexit?
jansdirk profile picture
Thanks as usual.
What a difference between malls/shopping centers in US and Continental Europe: in Europe for cheap despite oversupply of square meters per capita in US.
In UK most extreme due to Brexit: high quality retail Reits for sale at approximately 30 to 50 % of net asset value.
INTU right now is a bargain, also British Land and Capital &Counties and Hammerson with big discounts.
On mainland some 40 % discount for Unibail and Klepierre and others as well. Patience will be rewarded while receiving juicy dividends in 6 to even more % dividends.
Regards from Netherlands
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