With rates at historical lows, there’s been an interest in homeownership again, but where are the opportunities in the pandemic-ridden market? Rich Barton, CEO for real estate analytics company Zillow, says the market is exhibiting signs of a “great reshuffling” where there’s a more concentrated emphasis on home office space.
“I believe we are at the dawn of a great reshuffling,” said Barton. “I’m sure I don’t need to spell it out for you because we are all living it, spending an average of nine hours more per day at home. Zoom meetings are changing the way families think about space and privacy. Home offices are in high demand. Backyards are more desirable than parks and gyms. Work-from-home policies are eliminating the commute for many. There’s an endless list of considerations.”
For exchange-traded fund (ETF) investors who want to take advantage of the forthcoming changes in real estate, one fund to look at is the FlexShares Global Quality Real Estate Index Fund (GQRE ). The fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Northern Trust Global Quality Real Estate IndexSM. The index is designed to reflect the performance of a selection of companies that, in aggregate, possess greater exposure to quality, value, and momentum factors relative to the Northern Trust Global Real Estate Index.
Another fund to check out is the Xtrackers International Real Estate ETF (HAUZ), which seeks investment results that correspond generally to the performance of the iSTOXX Developed and Emerging Markets ex USA PK VN Real Estate Index. iSTOXX Developed and Emerging Markets ex USA PK VN Real Estate Index is a free-float capitalization-weighted index that provides exposure to publicly traded real estate securities in countries outside the United States, Pakistan, and Vietnam.
Funds that can adapt to the changes in the real estate landscape will benefit the most. Per a CBNC report, “companies could also fundamentally change how they want employees in the office. Zillow will offer its employees the option to work remotely at least part-time indefinitely, while Twitter and Atlassian have both said employees can work from home indefinitely.”
“The pandemic also has accelerated trends of people fleeing large, expensive U.S. cities. While home shopping is up everywhere, Barton said the company is seeing a “deceleration of migration” to cities and expects it to continue,” the report added.
“We are pretty confident that this is going to be a lasting, multiyear meaningful trend,” Barton said. “We can’t call exactly how it’s going to play out from the data yet. But from an intuition supported by some bit of data, it seems like something real.”