The real estate sector (XLRE) has been underperforming as uncertainty surrounding potential Federal Reserve interest rate cuts weighs heavily on the industry. To provide insight into the current state of the US housing market, Fundrise CEO and Co-Founder Ben Miller and CenterSquare Senior Investment Strategist Uma Moriarity join Market Domination.
Moriarity notes that shelter inflation is a significant component of the continued high inflation data, acknowledging that it is a “lagging indicator.” However, she points out that “real-time shelter costs” are lower than what is being reported in inflation prints, suggesting that the fight against inflation is “trending in the right direction.” With rate cuts still on the table, Moriarity believes the current high-rate environment is “providing a really good opportunity for investors today” in terms of real estate and homebuilder stocks.
Echoing Moriarity’s sentiment, Miller highlights that “real estate moves inversely with interest rates.” While rates have peaked, he believes “there’s much more room for the rates to come down.” As rates decline, Miller anticipates it will provide a “huge tailwind for real estate.” Additionally, he notes that the real estate sector is beginning to see a normalization, expressing optimism that the sector has “hit the bottom,” which could present a favorable buying opportunity for investors.
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This post was written by Angel Smith
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