Watch out tech stocks. Real estate finished November as the second best performing group in the S&P 500 Index. The sector added 12%, nipping at the heels of tech’s 13% gain. The momentum was fueled by—as with most everything right now—bets the US Federal Reserve is not only done raising rates, but will begin cutting them next year (just when next year is the new debate). Last month, the interest-rate sensitive real estate sector was a market outperformer as investors poured in capital. Additionally, US real estate investment trusts, which have been beaten-down by surging interest rates and economic uncertainty, are now showing signs of strength.
While the first thing most investors think of when they hear “real estate” these days is the cratering post-pandemic commercial space, battered office landlord stocks only represent a sliver of the larger whole. Real estate’s double-digit gain was its best since 2011 and compared favorably with the S&P 500’s 9% rise. For its part, Bank of America is looking kindly on the real estate space for 2024, with the bank’s Jeffrey Spector calling the REIT patch equity’s “diamond in the rough.” Investors on Friday were similarly optimistic—here’s your markets wrap.
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