REITS - what's the outlook ?

[syswizard]

I see my Prudential Global Real Estate A (PURAX) mutual fund is near an all time high......
however, I wonder what could derail the REITs of which this mutual fund holds many.

Can REITS get hammered only by a sudden rise in interest rates ?

Or are there other negative factors to consider ?
Articles like this are a bit disconcerting.....
http://www.marketwatch.com/story/to...om-sellers-market-to-buyers-market-2016-07-30

 

[cdcaveman]

artificially low interest rates inflate assets... you know the inverse.. are you trying to argue against that ?

 

[syswizard]

No, CD, I am not...just wondering what OTHER factors could impact the value of REITS.
For instance... If global economies continue to weaken, I can't see how real estate prices would continue to rise.

 

[TradeCat]

There is a real estate bubble. Nobody wants to admit it. In less than two years your REIT will likely lose value.

 

[syswizard]

There is a real estate bubble. Nobody wants to admit it. In less than two years your REIT will likely lose value.

I am getting out before the election.

 

[clacy]

There is a real estate bubble. Nobody wants to admit it. In less than two years your REIT will likely lose value.

Says who?

Shiller price index is still 9% below it's 2006 highs, and the home ownership rate is now sitting at a 50 year lows. Inflation and wage growth appear to be ticking up.

It might be bubbly in certain areas (Seattle, SF, etc) but overall, I think REIT's have room to go higher long term.

 

[syswizard]

It might be bubbly in certain areas (Seattle, SF, etc) but overall, I think REIT's have room to go higher long term.

Continued weak wage growth and slowing job growth may put the brakes on REIT's.
Another thing: with rental costs zooming, this will spark apartment development...and that supply will start to cap the monthly rents. I've witnessed this in my area already.

 

[i960]

Says who?

Shiller price index is still 9% below it's 2006 highs, and the home ownership rate is now sitting at a 50 year lows. Inflation and wage growth appear to be ticking up.

It might be bubbly in certain areas (Seattle, SF, etc) but overall, I think REIT's have room to go higher long term.

And that's what makes a market. Total fucking bubble BTW.

 

[drcha]

I think good for now. Good uptrend in IYR and RWR at the moment; I'm in, but re-evaluating periodically.

Speaking for Seattle/Bellevue, the rise so far shows no signs of abating. My house is up almost 20% in the last 12 to 24 months (which won't do me any damn good, since I plan to be carried out of here in a pine box). There are Chinese buyers coming in with cash, sight unseen (they don't bother to look at the house). On a walk the other day, I checked out a real estate sign in front of a house in my neighborhood, but could not decipher it (it was all in characters). I guess they know who their market is--not me, huh?

BTW, this is just a human-interest story. Seattle should not be considered a bellwether for the rest of the country; we are usually several months behind any trends, and we are a rather tech-heavy town, so a bit one-sided in terms of industries.

 

[eurusdzn]

I hear a lot of the West coast of US and Canada regarding Chinese buyers.
When do you think this wll begin on the East Coast? Maybe its the miserable weather.
If proximity is the issue then its doubtful we could get a bump from the UK or Europe.