While the U.S. markets are in fear of a recession, investors seem to know one place they want to park their money: real estate stocks.
Of the 28 real estate stocks tracked by The Real Deal — a sample of real estate investment trusts, mortgage companies, brokerages and other real estate services firms — 15 saw an uptick. That’s despite the S&P 500, Dow 30 and Nasdaq showing slight losses as of 1:45 p.m. Thursday, August 15.
The Dow plunged 800 points on Wednesday, August 14, after the yield on the two-year Treasury note pushed higher than the yield on 10-year Treasuries on early Wednesday — a sign investors think it’s riskier to make shorter-term investments than longer-term ones. Markets have been on edge since last week, after President Donald Trump escalated the trade war.
Of the 15 real estate stocks that were up, Realogy saw the biggest gains. The brokerage conglomerate’s stocks were trading at $6.03, up 2.29 percent. But not all stocks were up. Mortgage loan company Ocwen Financial Corporation recording the largest drop of 4.5 percent, trading at $1.40 per share.
The Real Estate Select Sector SPDR Fund, an index that follows real estate investment trusts and real estate management and development companies, was trading at $38.19, up less than 1 percent from the market’s close Wednesday, August 14.
As for only REIT stocks, their returns were up 0.91 percent as of 1:25 p.m. Thursday, August 15, according to the FTSE Nareit All REITs Index. But compared to last week, REITs overall may be losing: Last week the index’s domestic returns were up 1.67 percent, but so far this week they’re down 1.72 percent.
While a yield curve inversion may not always signal a recession, investors will be watching what the Federal Reserve does. Real estate stocks ticked up earlier this month when Fed chief Jerome Powell said there may be a possible cut in interest rates.
Last week, signs of an escalating trade war between the U.S. and China caused real estate stocks to dip but then largely performed well compared to the overall market.
Source: The Real Deal