Real Estate & REITs

Question 1

What is the natural relationship between real estate and interest rates?

Answer 1

Real estate benefits from falling rates and gets hurt by rising rates

Question 2

What are the two main categories of real estate?

Answer 2

Residential and Commercial

Question 3

What are the two main categories of residential?

Answer 3

Single and multi family housing

Question 4

What are the main categories of commercial RE?

Answer 4

Hotels, Office, Retail, Industrial, Medical, Educational

Question 5

What is the relationship between REIT prices and the USD?

Answer 5

Reits tend to get hurt when the USD bottoms and starts to rise - assume its to do with stronger dollar attracting more capital puts upward pressure on interest rates.

Vice versa - helped when USD tops and falls

Question 6

How does annualized volatility compare between real estate and stocks?

Answer 6

Stocks have double the annualized vol at about 15% vs 7% for real estate while delivering about the same return profile
Data since 1986 Cambridge Associates