As U.S. Housing Affordability Craters, Look to New Economy Real Estate


Home prices in the United States continue to climb, along with soaring mortgage rates, freezing more and more buyers out of the markets, the Wall Street Journal reported.

June was the most expensive month to buy a home in more than 30 years as high prices and high mortgage rates made the market increasingly unaffordable for many, while sales of existing homes continue to decline for the fifth consecutive month.

Home supply, or the number of US homes on the market, continues to be below historical average levels. It should continue to provide pricing pressure in the beleaguered market. Some things may have peaked in recent weeks, such as mortgage rates, and house prices should start falling in some high-demand areas, but the continued shortage of supply will likely prevent any meaningful price declines.

“We’re not going to go back to 2019 prices,” Nicole Bachaud, economist at Zillow, told the WSJ. “Even if prices start to come down a bit, it won’t have a significant impact on affordability.”

Navigating to seek out investment opportunities globally could provide potential for portfolio diversification, and investing in the drivers of the new economy could mean forward-looking opportunities. The WisdomTree New Economy Real Estate Fund (WTRE) offers exposure to global real estate companies with exposure to companies related to e-commerce, science or technology, some of the essential components of the future real estate market.

As U.S. Housing Affordability Craters, Look to New Economy Real Estate

Image source: WisdomTree’s WTRE fund page

WTRE seeks to track the CenterSquare New Economy Real Estate Index which is based on a parent universe of global REIT (Real Estate Investment Trust) equity securities as well as companies with a significant portion (75% of revenue) of their business is generated from real estate. domain. These companies are further selected for their exposure to technological and scientific fields related to cloud computing, logistics, supply chain management and life sciences.

Titles are assigned a technology score that takes into account various factors of exposure to the new economy, either directly or through rentals to tenants who engage in these businesses, and the highest-rated titles are included in the index.

The index also filters out highly leveraged companies with a debt-to-total market capitalization ratio above 70%, then weights stocks based on their free-float market capitalization and growth and ranking, weighting those with high growth. and/or the highest value, within the limit of 7.5%.

WTRE has a spend rate of 0.58%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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