REITs Win, Homebuilders Lose in Economic Revival
A BlackRock survey has found that nealry half of all institutional investors look to increase their real estate holdings over the next 18 months. But there are industry winners and losers in the current market and economic surge.
Take the divide between real estate investment trusts and homebuilders. The decade-old Vanguard REIT Exchange-Traded Fund, for instance, has enjoyed gains of 65% since its inception, while the iShares U.S. Home Construction ETF has plummeted 49% since its 2006 founding. Bloomberg notes that a rebounding job market has fueled an office construction boom benefitting REITs. But even with improved job prospects, homebuying ability will lag the office sector revival.
New single-family homes in November sold at their most sluggish rate in four months. And since 2007 residential construction starts have run at about two-thirds their 1.45M unit annual average going all the way back to 1959.