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February 2017   Volume 43, Number 2      
 

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Newly Created S&P 500 Real Estate Sector Continues to Decline

Since its creation in September 2016, the S&P 500 real estate sector has lagged behind the rest of the market as its worst performing sector.

The sector declined 10 percent since it launched, while the S&P rose 2 percent in the same time. However, analysts are not surprised about the real estate sector’s continued poor performance, given recent interest rate increases.

“For the past 3 years, while we’ve been in this low interest environment, the REIT sector/Industry has hovered between 35 and 45 forward earnings, clearly commanding a premium for the dividends paid out and moving in the opposite direction of the yields,” Erin Gibbs, Research Analyst at S&P Global Market Intelligence, Research Division, wrote in an email to CNBC.

During the first half of 2016, real estate investment trusts (REITs) were one of the best-performing groups, gaining nearly 9 percent in that time, while the S&P gained only 3 percent overall. However, as the 10-year note yield began to rise, some REITs saw a sharp decline in valuations.

The Vanguard REIT index fund, which tracks the performance of REITs, declined nearly 5 percent over the past 6 months. The top holdings of this index fund include Simon Property Group, Public Storage and Prologis.

 

 

 

 

In this issue:

Tiny Home Neighborhoods Are Popping up Across America

Chinese Developers Reassess U.S. Projects

Commercial Real Estate Market Sees Mixed Results After Election

First-Time Homebuyers Struggle to Find Affordable Homes to Purchase

Hiver CEO Predicts Major Tech Trends in Real Estate for 2017

Homebuilder Confidence Has Increased, but They’re Not Building New Homes

Newly Created S&P 500 Real Estate Sector Continues to Decline

Redfin Predicts 2017 Will Be the Fastest Housing Market on Record

Russian Interest in U.S. Real Estate Increases After Trump Election

Rising Sea Levels Are Forcing Agents to Rethink How They Sell Coastal Properties


 


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