In this article, we will be taking a look at the 14 best real estate and realty stocks to buy according to analysts. To skip our detailed analysis of the real estate sector, you can go directly to see the 5 Best Real Estate and Realty Stocks To Buy According to Analysts.
Housing Versus Retail: Where to Invest in Real Estate?
The real estate sector has been battling with elevated mortgage rates this year, resulting in the US housing market suffering from a lack of demand among the population. However, some may expect the struggles of the real estate sector to abate as the year progresses, especially as many financial professionals begin to analyze the state of US real estate markets. Several spaces within the real estate sector are under-invested in, leaving the arena free and open for investors looking to make a real estate play.
On February 29, Carly Trip, the Head of Investments at Nuveen Real Estate, joined CNBC's "Closing Bell Overtime" to discuss the state of the US real estate markets. Here's what she had to say:
"On the residential market, it's kind of like no new news, however what's interesting is that the consumer is really starting to explain their tolerance for mortgage rates. In December we saw really strong numbers, mortgage rates had come in about 50 basis points, bouncing around six and a half. As they have suddenly come up since then and hover above 7%, consumers do not like that. And so we're seeing the results of that in pending home sales. So we expect that that is not gonna improve, inventory will remain low until rates come around 6%, in which case your cost to own versus cost to rent margin really starts to shrink."
Despite the above observations, Tripp noted that other areas in the real estate markets are doing better. Here's what she said:
"Retail's doing amazingly well. So retail has been the underdog of the last decade. And what we're seeing in our centres is increased activity, a lot of demand, increased sales. The consumer is obviously very resilient and strong. That is accomodating to retail spending, 80% of retail sales do involve a physical store which is a positive for our centres. And not only that, there's no new supply added to retail. Over the last five years, about a 130 million square feet of retail has been converted to other uses, so it's really been under-invested in. So the outlook for retail is very, very strong."
Industrial Real Estate Performs Well
Similarly, for the industrial real estate side, Tripp had positive insights to share. Here are some of the comments she made:
"Industrial's been incredible. It has performed exactly as real estate should perform. Income has outpaced inflation, right, real estate is expected to be an inflation hedge, that's why it's such a great diversifier to a portfolio. And so we continue to see incredibly strong demand for industrial.Supply has slowed, that was the concern pre-pandemic. However, due to lack of construction spending, lack of financing just generally speaking, bottlenecks in the construction system, we expect that demand is just gonna continue to flow. E-commerce spending is not going anywhere.
Considering these highlights, while the residential side of real estate seems to be still struggling in 2024, that does not mean all real estate should be avoided this year. Several other areas within the sector remain ripe for investment. As such, we have compiled a list of some of the best real estate stocks to invest in, including names such as KE Holdings Inc (NYSE:BEKE), Crown Castle International Corp. (NYSE:CCI), and Realty Income Corporation (NYSE:O). These include some of the best real estate stocks with dividends and some of the best real estate stocks to buy for the long term.
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