Chart of the Week - Real Estate Sentiment
One of the most interesting charts on our radar right now...
Chart of the Week - The “Obvious” Risks in Real Estate
Real Fear in Real Estate: I’ve previously documented the risks facing commercial real estate as well as housing, given the extreme overvaluation reached in the wake of the pandemic stimulus. But by this point a lot of people are talking about it, and the pain is starting to become more pronounced, especially in liquid markets e.g. REITs. As such, the Sentix survey has seen real estate asset class sentiment drop to the worst level in the history of that survey — even worse than the depths of the financial crisis.
There’s basically 2 ways this unfolds: either investors are way too pessimistic and real estate starts to bottom and surprise to the upside (I think this can be possible at least for REITs, and at least in the short-term); or this negative sentiment feeds into the fundamental headwinds and accelerates/reinforces the downdrafts.
Even with the contrarian aspect, I think it’s still hard to get excited on real estate in the immediate term with the rate shock on the one hand and weaker growth prospects ahead on the other hand. Finding “goldilocks” is going to be very hard indeed…
Key point: Investors are extremely pessimistic on real estate as an asset class.
Check out the full archives of the Chart Of The Week for more charts.
Aside from the Chart Of The Week, this email gives you a brief overview of what was covered in the latest Weekly Insights report (which is a key part of our paid entry-level service on Substack).
Check out our paid service with a 7-day Free Trial
Topics covered in the latest Weekly Insights Report
Aside from the chart above, we looked at several other charts and macro/asset allocation issues right now:
Quarterly Pack: key highlights and conclusions from the latest pack.
Market Update: developments in rates & FX, global equities & risk pricing.
EMFX: checking in on the technicals (and implications for EM equities).
Monetary Policy Pulse: status check and impact on credit markets.
Global Equity “Relative Value Trinity”: still ample opportunities out there.
EM Equity Valuations: taking stock of recent developments.
Subscribe now to get instant access to the report so you can check out the details around these themes, as well as gaining access to the full archive of reports.
For more details on the service check out this recent post which highlights:
a. What you Get with the service;
b. the Performance of the service (results of ideas and TAA); and
c. What our Clients say about it.
Thanks for your interest. Feedback and thoughts welcome.