Many months after the real estate bubble popped and sent the world spinning into crisis, people are left asking whether any recovery is in sight or if we’re just gearing up for another round of pain in the market and exchange traded funds (ETFs).
Some analysts say that the real estate investment trust (REIT) and the broader real estate sector improvements primarily owe to stronger-than-expected earnings that many real estate companies have reported this season. Sara Nunnally for Taipan’s Tipping Point says foreclosures and housing prices are falling, while new home orders are on the rise. Homebuilder confidence is even up (though still far below the norm) and homebuilding activity improved 2.8% last month.
But does that mean we’re out of the woods? Few seem to think so.
Shashien Nasiripour for The Huffington Post reports that more commercial real estate fallout may be just around the corner. Over the next five years, about $1.4 trillion in commercial real estate loans will reach the end of their terms and require new financing. Nearly half are “underwater,” meaning the borrower owes more than the property is worth. Commercial property values have fallen 40%. [Has Real Estate Hit Bottom?]
Congressional Oversight Panel Head Elizabeth Warren warned that the panel was concerned that if the Treasury didn’t take action to address the problems that loom, the impact could spark another devastating round in the financial crisis. [The Future of Commercial Real Estate ETFs.]
For more stories about REITs, visit our REITs category.
- Vanguard REIT Vipers (NYSEArca: VNQ)
- SPDR Dow Jones REIT (NYSEArca: RWR)
- iShares FTSE NAREIT Industrial/Office Complex (NYSEArca: FIO)
- First Trust S&P REIT Index (NYSEArca: FRI)
- iShares Dow Jones U.S. Home Construction (NYSEArca: ITB)
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.