Displaying items by tag: reits

(New York)

One of the surest signs in the economy right now is that real estate is in trouble. Data coming out of the sector has been consistently weak for months and shows a clear downtrend in the housing market. Rates seem to be playing a big part of that, as demand for housing has sunk as rates have risen. That could prove one of the few brakes on the Fed’s relentless rate hike path. The fall in real estate comes at a time when the market should be surging, as unemployment is at extreme lows and Millennials are entering their peak home buying years.

FINSUM: Besides stocks and bonds freaking out, real estate is one of the areas showing a lot of weakness, and this it is perhaps one of the few aspects that could stop the Fed.

(Los Angeles)

More bad news is flowing out of the housing market. For the last several months, home sales, new builds, and demand has been falling. Prices are down in some major metropolitan areas. Now, new data shows that mortgage demand is contracting. US mortgage applications fell to their lowest level since 2014 in recent weeks. This comes on the back of mortgage rates rising to their highest since 2010.

FINSUM: There have been eight rate hikes since 2018 and home prices are at lofty levels. A downturn should come as no surprise.

(New York)

How does a REIT with great long-term business fundamentals and eye-popping yields sound? If that sounds good, take a look at Ventas. The REIT owns 1,200 properties, many focused on senior and assisted-living facilities. The long-term business looks very healthy as demographics—including retiring Baby Boomers—are a major growth opportunity for the REIT. The dividend yield is a strong 5.7%, and it appears safe, according to Morningstar.

FINSUM: Definitely seems like a REIT worth some more investigation. We like the combination of good yield and strong long-term fundamentals.

(New York)

The biggest dividend sectors, such as utilities and REITs, are getting hammered alongside the selloff in bonds. With treasury yields surging on Wednesday, utilities and REITs fell as much as bond prices. Dividend stocks had been experiencing a month of strong performance, but fears have been rising since the last Fed meeting, when the central bank took on a decidedly more hawkish tone.

FINSUM: We are concerned for dividend stocks right now because we think the big move higher in yields might have reset the market’s thresholds. Is the next stop 3.5% on the 10-year?

(New York)

Goldman Sachs has a new kind of fund it is offering, and we thought advisors might like to hear about it. In what are being called “tax-eating” funds, Goldman is offering the opportunity to invest in “opportunity funds”. These special funds, which are provided for in the new tax code, are designed to promote investment in low-income communities. Interestingly, the funds are deferred from capital gains tax until 2026, so clients can move their capital gains into these funds and shield them from taxes. Doing so will ultimately result in a 15% reduction in capital gains taxes on the original gains, and 0% taxes for any gains on the opportunity funds themselves.

FINSUM: Goldman Sachs has been doing this kind of investing for years, and now the tax change has really put wind in its sails. Seems like it may be worth looking into.