Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA
  • Daily Recap

  • U.S. equity markets rebounded Monday following two-straight weeks of declines amid a flurry of M&A news and after clinical trials of a leading vaccine candidate were restarted in the U.K.

  • Recovering from a 2.5% decline last week, S&P 500 finished higher by 1.3% while the tech-heavy Nasdaq 100 gained 1.7% after dipping into correction territory last week.

  • Real estate equities led the gains today as the broad-based Equity REIT ETF (VNQ) finished higher by 2.5% today with all 18 property sectors in positive territory.

  • Apartment Investment and Management (AIV) jumped more than 7% today after it announced plans to split into two separate publicly traded companies.

  • Student housing REIT American Campus (ACC) jumped more than 5% after it announced that its portfolio is 90.3% leased for the academic year as students returned to flagship "college towns" despite fully-remote learning options as many institutions.

U.S. equity markets rebounded Monday following two-straight weeks of declines amid a flurry of M&A news and after clinical trials of a leading vaccine candidate from AstraZeneca (AZN) were restarted in the U.K. after a safety-related pause while U.S. trials remain on hold. Recovering from a 2.5% decline last week, S&P 500 ETF (SPY) finished higher by 1.3% while the tech-heavy Nasdaq 100 (QQQ) gained 1.7% after dipping into correction territory last week. Real estate equities led the gains today as the broad-based Equity REIT ETF (VNQ) finished higher by 2.5% today with all 18 property sectors in positive territory. The Mortgage REIT ETF (REM), meanwhile, jumped 3.4%.

As discussed in our Real Estate Weekly Outlook, the recent choppiness in financial markets has been exacerbated by Congress' inability to reach a compromise on a renewed coronavirus relief bill, but solid economic data and encouraging coronavirus trends in the United States have so-far blunted the impact. All 11 GICS equity sectors finished in positive territory today, led by the Real Estate (XLRE), Technology (XLK), and Materials (XLB) sectors. Residential REITs led the Hoya Capital Housing Index to strong gains today ahead of a busy week of housing data in which investors will be parsing data to see if the red-hot housing market, which has led the early post-pandemic rebound, can continue its strength into the cooler months. 

We have a busy slate of economic and housing data in the week ahead. On Wednesday, we'll see Homebuilder Sentiment for September, which unexpectedly surged last month to record-high levels. Also on Wednesday, we'll see Retail Sales data for August, which had completed the V-shaped recovery last month as retail spending exceeded pre-pandemic levels. On Thursday, we'll see Housing Starts and Building Permits for August. Housing Starts jumped 22.6% last month to a seasonally adjusted annual rate of 1.50 million units while Building Permits rose 18.8% to a rate of 1.50 million units. As usual, we'll also be watching the weekly Mortgage data on Wednesday and Jobless Claims data on Thursday.

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  • Alex Pettee, CFA
  • The "tech-wreck" dragged on as U.S. equity markets declined for the second-straight week after Congress failed to reach a compromise on a renewed stimulus package and after a potential vaccine setback.

  • The seemingly unstoppable rally from the "stay-at-home winners" has come to a screeching halt over the last two weeks. The Nasdaq 100 dipped into "correction territory" with declines of nearly 5%.

  • It was an especially choppy week in the real estate sector as the relatively mundane 2.2% decline from the broad-based Equity REIT ETF masked a sharp dip from retail REITs.

  • It shaped up to be a very busy week of REIT-related news flow, headlined by a flurry of rent collection updates, several dividend increases, and some notable M&A news in the mall and self-storage REIT sectors.

  • Homebuilders were a bright spot this week as housing data continues to impress. Mortgage applications to purchase a single-family home are now higher by a stunning 40% from last year.

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  • Alex Pettee, CFA

Daily Recap

  • U.S. equity markets were mixed Friday as the major averages ended lower for the second-straight week amid continued pressure on the previously-high-flying technology stocks.

  • Ending the week lower by 2.5%, S&P 500 finished higher by 0.1% today. The tech-heavy Nasdaq 100, however, dipped 0.7% today and ended the week off by nearly 5%.

  • Real estate equities modestly outperformed on the week. Ending the week with declines of 2.2%, Equity REITs finished lower by 0.6% today with 14 of 18 sectors in negative territory.

  • Casino and gaming REIT VICI Properties (VICI) became the 26th equity REIT to raise its dividend in 2020 above prior-year levels. On the other hand, we've tracked 64 equity REITs in our universe of 170 REITs to reduce or suspend their dividend since the start of the pandemic.

  • Apartment REIT AvalonBay Communities (AVB), which owns a heavily-urban portfolio, reported downward pressure on rents and occupancy in urban markets. Rents declined 4.8% for July and August while occupancy dipped 130 basis points.

U.S. equity markets were mixed Friday as the major averages ended lower for the second-straight week amid continued pressure on the previously-high-flying technology stocks and as hopes dim on an extension of fiscal stimulus measures. Ending the week lower by 2.5%, S&P 500 ETF (SPY) finished higher by 0.1% today while the Dow Jones Industrial Average (DJI) rose 131 points. The tech-heavy Nasdaq 100 (QQQ), however, dipped 0.7% today and ended the week off by nearly 5%. Real estate equities modestly outperformed on the week. Ending the week with declines of 2.2%, Equity REIT ETFs (VNQ) finished lower by 0.6% today with 14 of 18 property sectors in negative territory. The Mortgage REIT ETF (REM), meanwhile, finished lower by 0.7% to end the week with 1.0% declines. 

Following a similar pattern as last week, the economically-sensitive sectors were generally among the better-performers this week amid the technology-led sell-off. 8 of the 11 GICS equity sectors finished in positive territory today, led by the Industrials (XLI), Materials (XLB), and Financials (XLF) sectors. While investors have been discouraged by the failure of Congress to reach a compromise on an extension of the coronavirus relief measures, encouraging pandemic trends in the U.S. have likely offset some of the concern among investors as the unfortunate claim of "center of the pandemic" returns to Europe. Homebuilders and the Hoya Capital Housing Index finished higher today following another generally strong week of housing data, which we'll cover in full detail in our upcoming Real Estate Weekly Outlook report.

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