While my anecdotal experience is limited to the San Francisco
Bay Area, where bidding wars escalate the prices of
already-expensive homes into even-more-expensive homes, and listing
prices seem to have jumped more than 10 percent in just the last
few months, the data outside my world support this theory as
This week, we saw a host of data supporting a real estate
recovery. The Federal Housing Finance Agency House Price Index
jumped 0.6 percent in December; the S&P/Case-Shiller Home Price
Index jumped 0.9 percent in December, fueling a year-over-year gain
of 6.9 percent; and new home sales jumped 15.6 percent in
Given the relatively few number of people who want to move
during the holiday season, I'd guess that the numbers are likely to
improve even further for January and going forward.
Further, mortgage rates are starting to rise as more buyers are
entering the market.
The average 30-year fixed rate mortgage grew from 3.47 percent
in December to 3.53 percent in January, according to the FHFA
Monthly Interest Rate Survey. Rates are still rising, up to 3.56
percent for the week ending Feb. 21, according to Bloomberg.
Now, if you agree that the real estate market is only going up,
there are many
for that play.
The iShares FTSE NAREIT Residential Plus Capped ETF
(NYSEArca:REZ) attempts to provide focused exposure to residential
real estate in particular, while funds like the First Trust S&P
REIT ETF (NYSEArca:FRI) and the Vanguard REIT ETF (NYSEArca:VNQ)
provide broad exposure to real estate in general.
For the truly convinced, there are also two leveraged ETFs:the
ProShares Ultra Real Estate ETF (NYSEArca:URE), which provides
double exposure to the daily returns of the Dow Jones U.S. Real
Estate Index, and the Direxion Daily Real Estate Bull 3x ETF
(NYSEArca:DRN), which provides triple exposure to the MSCI US REIT
The leveraged ETFs will take a little more caution to hold,
since you'll need to rebalance your holdings to maintain the target
amount of leverage. But if real estate really takes off, there's no
denying that those leveraged ETFs are poised to post great
The total return charts of the five ETFs mentioned above make a
great case for the leveraged plays.
Don't forget to check IndexUniverse.com's ETF Data
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