Since the start of the pandemic, real estate prices have seen strong upward momentum as homes were highly valued amid social distancing measures. Years into the crisis, real estate prices haven’t let up despite cooling forecasts from economists.
The forecasts are warranted given the simple logic of what goes up must eventually come down. Real estate prices were on a slow recovery after the housing crisis about 15 years ago before shooting higher when the pandemic hit.
According to a Fortune article, prices are up 19% within the past year. The article noted that “in the years leading into the 2008 housing bust, the biggest 12-month jump was 14.5%.”
This price jump is now re-inviting talk of a real estate bubble occurring once again as “real estate research firms forecasted that the ongoing housing boom would lose some steam and home price growth would decelerate. It hasn’t come to fruition—yet.”
“We’re not in a housing bubble just yet—but we’re skating close to one if prices continue rising at the current pace,” said George Ratiu, a housing economist at Realtor.com
A Global Real Estate Option to Consider
If real estate prices can maintain their upward trajectory, one exchange traded fund (ETF) to consider is the FlexShares Global Quality Real Estate Index Fund (GQRE). The fund offers real asset exposure without having to purchase or maintain the asset itself, speaking to the dynamic ability of ETFs in the capital markets.
GQRE seeks investment results that generally correspond to the price and yield performance of the Northern Trust Global Quality Real Estate Index. The index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater exposure to quality, value, and momentum factors relative to the Northern Trust Global Real Estate Index.
Price appreciation continues to be the norm for real estate, and market experts don’t expect it to stop with the new year around the corner. If the U.S. real estate market serves as the bellwether, then global markets should follow the same trend.
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