Reading the Real Estate Tea Leaves

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Man, has real estate been the place to be for the last five years! Even real estate mutual funds managed to kick a whole lot of ass, turning in a 5-year annualized performance of 18.56 percent versus only 4.9 percent in the S&P 500. Though naysayers argue the party has to end soon, boosters argue that if the economy can continue to grow without inflating, real estate could continue to be a rewarding sector. Not many people are making the case the the huge returns can continue. As Morgan Stanley's Ted Bigman put it to investors, "We're sorry you missed the best run-up that we had in years, and we strongly discourage you from expecting comparable returns. However, having a meaningful allocation still makes sense."
Beware of Warnings About Real Estate [NY Times]

Comments

I think the macro environment feels a lot better for real estate now than a couple of months ago. Combined with bonus checks clearing this month, I think we'll see a significant pick up in activity.

Posted by: Kel at January 9, 2006 10:14 AM

Inventory is building up, interest rates are up from last year. I see a stabilization this year, followed up by a decline for 2-3 years.

Posted by: erg at January 9, 2006 4:51 PM

Income and Values are still too far apart... sideways is the best we're gonna get for a while (maybe not in some nabes) especially if % rates keep creep up ... flat yield curve ..... what does it mean?

Posted by: chuckdWaWa at January 9, 2006 5:14 PM

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January 9, 2006

Reading the Real Estate Tea Leaves

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