Traders looking to the real estate sector will want to keep an eye out for the primary drivers in the industry, and according to one market expert, that will be technology and millennials. Both can influence leveraged trades in the the Direxion Daily MSCI Real Estate Bull 3X ETF (NYSEArca: DRN).
Technology and data that will make the consumer smarter,” said Century 21 CEO Mike Mielder. “They’ll come to the process more educated about the marketplace, houses, comps. There’s also a lot of talk about iBuyers. There are more investors in the space, you see a lot of big players and competition is extremely fierce. There is a lot of noise, but despite the noise, people are using real estate professionals more than ever.
“There are 180 steps, plus or minus, from when you make an offer to the day you get the keys,” Mielder added. “When buyers realize this is a really cumbersome process, then they realize they need a professional who can deliver a high-quality experience. The professionals who continue to win in this space are the ones who care for the customer, have strong communication skills and understand customer experience. Technology will make us more efficient. But if you’re strategic, you’ll think beyond transactions and think about experiences.”
The Next Wave Of Home Buyers
Another trend to watch is the next wave of home buyers in an aging population, and that’s millennials.
“They’re the next wave of home buyers,” said Mielder. “More than any generation, they want an experience over transaction. They’re more apt to do things online, look up ratings and reviews, whether it’s a real estate agent or where to go for dinner. But because they are experience-driven they are using real estate agents more than any other generation, at a rate of about 91%.
“By 2025, there will be 16 million new households in the U.S., mainly millennials raising families,” he added. “While buying a home has gotten pushed further in their life cycle—they have the same affinity to be a homeowner as their parents. The bigger problem is that the U.S. is running out of inventory for affordable homes. Whether it’s millennials or the generation behind them. The question is how can we get people into an affordable first home?”
As for the fund, DRN seeks daily investment results equal to 300% of the daily performance of the MSCI US IMI Real Estate 25/50 Index. The index is designed to measure the performance of the large-, mid- and small-capitalization segments of the U.S. equity universe that are classified in the real estate sector as per the GICS.
For more real estate trends, visit ETFTrends.com