by Clif Droke
Among the biggest relative strength leaders in the US broad market right now are the home builders and REITs. The US real estate sector is heating up and is also beginning to attract “hot money” inflows from foreign investors looking for a profitable safe haven. Real estate is building a measure of momentum not seen since before the 2008 credit crash. As such, the question as to whether a renewed property market mania is underway is a timely one and will now be addressed.
The following graph of the Dow Jones Equity REIT Index (DJR) illustrates the growing demand for hot properties. REITs in particular have been on a rip-and-tear of late as reflected in the chart. Ultra low interest rates and continued agency bond purchases by central banks have helped bolster real estate and the related equities, among other factors we’ll discuss here.