REITs could be a great investment next year (after a rough 2022)

Rising interest rates and the weakening economy have crushed real estate investment funds in 2022, with the FTSE Nareit All Equity REIT index down 23% year to date.

Rising rates hurt REITs because they borrow money to buy real estate and because higher yields make bonds, which are generally safer investments, more attractive compared to REITs.

Meanwhile, a slumping economy reduces demand for real estate.

But REIT declines could reverse as early as next year, assuming the Federal Reserve stops raising interest rates.

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