by Michael Tarsala
The folks at HistorySquared think that real estate has done more than bottomed: They argue that it’s booming.
- More than 20 major markets saw a 10% or greater rise in median listing prices in May vs. the previous month.
- Rental yields are positive in 98 of 100 major markets, with rental prices up the most since 2007.
- Wells Fargo (WFC) increased mortgage loans 30% in Q1.
- In some markets, bidding wars are making a comeback.
We at Covestor do not have a real estate investment model.
But several of our investment model managers are invested in the sector right now.
One is John Gerard Lewis, with his Stable High Yield model. More than 40% of it is comprised of mortgage real estate investment trusts, or mREITS. The investments arbitrage short-term and long-term mortgage securities and are required to distribute 90 percent of their profits in dividends.
And in recent months, manager Mike Arold of the Technical Swing model has traded homebuilding stocks including Lennar (LEN) and Toll Brothers (TOL), each cracking his top 5 holdings. In addition to strong price momentum, he notes that the homebuilders have less exposure to European news headlines than some other sectors.
