Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Stocks Dip, REITs Rally After Fed Disappoints

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  • On the most closely-watched Federal Reserve interest rate decision since “lift-off” in December 2015, US stocks delivered their worst week of the year. The S&P 500 dipped more than 3%.

  • Seen by investors as a “hawkish” cut,  commentary on the decision suggested that monetary policy would be less accommodative than hoped. Global bond yields plunged on fears of further economic slowing.

  • While global economic indicators continue to show signs of meaningful slowing, solid payrolls and income data suggest that US will again have to be the engine of global growth.

  • Following an otherwise firm week of US economic data and earnings, hopes of a trade truce with China were dashed on Friday as the US threatened additional tariffs.

  • The domestic, defensively-oriented REIT sector was among the few gainers on the week. REITs rallied on strong earnings and on the biggest plunge on the 10-year yield in seven years.

Home price appreciation moderated meaningfully from mid-2018 through early 2019, but has shown early signs of stabilization and even reacceleration in recent months amid a favorable backdrop of lower mortgage rates.

That said, unlike in the "housing bubble" period, home prices are not significantly out-of-line with total income growth (indexed to 1995) following the steep post-recession correction in home values.


As expected, the relatively high-tax coastal markets have been among the weakest performing housing markets following the 2017 tax reform which capped state and local tax deductions, significantly raising the total cost of ownership for high-priced homes in these markets.


For an in-depth analysis of all real estate sectors, be sure to check out all of our quarterly reports: Homebuilders, Apartments, Student Housing, Single-Family Rentals, Manufactured Housing, Cell Towers, Healthcare, Industrial, Data Center, Malls, Net Lease, Apartments, Shopping Centers, Hotels, Office, Storage, Timber, and Real Estate Crowdfunding.


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. All commentary published by Hoya Capital Real Estate is available free of charge and is for informational purposes only and is not intended as investment advice. 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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Hoya Capital Real Estate ("Hoya Capital") is an SEC-registered investment advisory firm that provides investment management services to ETFs, individuals, and institutions, focusing on portfolio and index management of publicly traded securities in the real estate industry. It is not possible to invest directly in an index. Index performance cited in this website or commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Nothing on this site nor any published commentary by Hoya Capital is intended to be investment, tax, or legal advice or an offer to buy or sell securities. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and should not be considered a complete discussion of all factors and risks. Data quoted represents past performance, which is no guarantee of future results. Investing involves risk. Loss of principal is possible. Investments in companies involved in the real estate and housing industries involve unique risks, as do investments in ETFs, mutual funds, and other securities. Hoya Capital has no business relationship with any company discussed/mentioned. Hoya Capital never receives compensation from any company discussed/mentioned. Hoya Capital, its affiliate, and/or its clients and/or its employees may hold positions in securities or funds discussed on this website and our published commentary. A complete list of holdings and other important disclosures and definitions are available by clicking the links below.

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