Real Estate sector lost 21.2% in 1H22, and the Real Estate Selection Sector SPDR ETF (XLRE) was down 21.1%.
Never seen rising mortgage rates (currently at 5.7% on average from just 3.2% at the start of 2022), rising home prices and an unbalanced domestic supply and demand have been some hallmarks of the US real estate sector in the past 6 months.
During the first half of 2022, the following appeared as the main winners / losers; Opendoor Technologies (OPEN) and DigitalBridge (DBRG) are among the major losers while Mortgage REIT Chimera Investment (CIM) is also joining the list.
Two medical REITs – National Health Investors (NHI) and Sabra Health Care REIT (SBRA) are among the major winners; NHI in early June reaffirmed FY22 guidance indicating a marginal increase in May portfolio.
Housing REIT, U.S. Campus Communities (ACC) saw a gain of 13.2%; it won its Q1 revenue consensus in its last quarterly report before its sale to Blackstone.
In May, new home sales rose 10.7% M / M while Y / Y saw growth of 5.9%; existing home sales fell 3.4% in May marking its direct fourth month of decline and on a Y / Y basis it sees an 8.6% decline.
The market generally believes that it will firmly be a selling market with buyers not having an advantage in the market.
While housing payments are at the lowest point since the financial crisis, light market also does not indicate good signs with occupancy rates at all-time highs and rents rising.
A chief economist at CoreLogic predicts a gradual slowdown from house price growth to a single-digit appreciation from now on, while the U.S. bank’s chief economist sees a strong housing market with low housing inventory, low unemployment, wage growth and a large demographic of incoming buyers. their peak home purchase years.
Economists at Realtor.com recently revised their forecasts:
It further added, “While housing costs remain high, pushing home buyers to make difficult choices about their budget priorities, the number of homes for sale is expected to continue to grow, building the turnaround begun in May.”
Most industry analysts predict that inventory will remain scarce in 2022 and 2023 with a slower price appreciation than it has seen in the past two years; an increase in lists and high demand is seen to continue.
Freddie Mac expects some cooling in housing demand, predicting house price growth to slow from 15.9% in 2021 to 6.2% in 2022 and then to 2.5% in 2023; Q4 home sales are expected to come in at 7.1M and touch 6.9M in 2022 and increase to 7M in 2023.
Altos Research indicates that more than 25% of homes on the market have now reduced their price as opposed to how prices have climbed over the last two years.
