Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

IPO Mania? • Housing Leads • More Dividend Boosts

Summary

  • U.S. equity markets pulled back from record-highs Wednesday despite signs of slow-but-steady progress on a stimulus package as investors await the rollout of the coronavirus vaccine in the United States.

  • The tech-heavy Nasdaq 100 was under pressure today amid an IPO frenzy as Doordash (DASH) surged in its debut while Airbnb (ABNB) priced its IPO with an implied valuation of.

  • Real estate equities were mixed on the day as the broad-based Equity REIT ETF (VNQ) declined by 0.6% today with 11 of the 18 property sectors in negative territory.

  • The wave of REIT dividend boosts continued as CoreSite (COR) became the 48th equity REIT to boost its dividend this year while WP Carey (WPC) raised its dividend for the second time. 66 REITs have reduced their payout this year.

  • The U.S. housing market is showing few signs of slowing. The MBA reported mortgage applications to purchase a single-family home - a forward-looking indicator of future home sales - are now higher by 22% from last year.

Real Estate Daily Recap


U.S. equity markets pulled back from record-highs Wednesday despite signs of slow-but-steady progress on a stimulus package as investors await the rollout of the coronavirus vaccine in the United States. After closing at record-highs for the 30th time this year yesterday, the S&P 500 ETF (SPY) pulled back 0.9% while the Dow Jones Industrial Average (DIA) dipped 105 points. Real estate equities were mixed on the day as the broad-based Equity REIT ETF (VNQ) declined by 0.6% today with 11 of the 18 property sectors in negative territory. The Mortgage REIT ETF (REM) declined 0.6% on the day.

The tech-heavy Nasdaq 100 (QQQ) was under pressure today amid an IPO frenzy as Doordash (DASH) surged in its debut while Airbnb (ABNB) priced its IPO with an implied valuation of more than $42 billion. Social media stocks were hit as Facebook (FB) now faces an antitrust suit from the FTC and 48 state/territory attorneys general. 8 of the 11 GICS equity sectors finished lower on the day with the Technology (XLK) and Communications (XLC) sectors dragging on the downside. Strength from home improvement firms Lowe's (LOW) and Home Depot (HD) offset weakness from the homebuilders to lift the Hoya Capital Housing Index to modest gains.

On that point, the U.S. housing market continues to lead the economic recovery and is showing few signs of slowing as the Mortgage Bankers Association reported this morning that mortgage applications to purchase a single-family home - a forward-looking indicator of future home sales - are now higher by 22% from last year while refinancing applications are now higher by 89% from last year. The 30-Year Fixed Mortgage Rate with conforming loan balances stands at 2.90%, a fresh all-time series low.

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Disclosure: A complete list of holdings and Real Estate and Housing Index definitions and holdings are available at HoyaCapital.com. Hoya Capital Real Estate advises an Exchange Traded Fund listed on the NYSE. Hoya Capital is long all components in the Hoya Capital Housing 100 Index.

Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.

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