The stock market Tattered With last week’s inflation and monetary policy news torrents, and the real estate industry hasn’t escaped turmoil.
The real estate industry wasn’t functioning equally across the pandemic. Sectors such as industry and apartments were supported by rising demand, and offices and retail stores were sluggish during and after the blockade.
However, factors that have caused the stock market to fall, especially inflation and the rise in interest rates it has caused, are now affecting the entire real estate market. On top of that, the situation in the pandemic era, which favors the housing and industrial sectors, has been declining since the beginning of the year.
Industrial and multi-family stocks have fallen sharply since their peak in December. Shares in Prologis and Renner, indicators of the industrial and condominium sectors, have fallen by 50-60%, respectively.
Handel St. Just, who tracks Mizuho Securities’ REITs, said stocks in real estate investment trusts fell 24% this year. “This year was a tough year,” said St. Just. “The list of macroeconomic headwinds continues to grow.”
On a longer timeline, Proptech FCM’s platform has fallen the farthest since its previous pandemic peak. Redfin inventories have been steadily declining since early last year, down 70% from their February 2021 peak.
And pandemic losers, offices and retailers are farther from pre-covid levels than ever before. SL Green is down 30% from June 2021 and down 70% from its five-year peak in August 2018.
The effects of these downward trends are just beginning to become apparent. Some proptech platforms have begun dismissing staff, and Redfin and Compass have announced layoffs this week.
A slump in stock prices raises the cost of capital for a company, making it difficult to buy other companies, hire workers and maintain the company they own.
In the financial sector, St. Just said venture capital startup funding has slowed. “Few companies are starting. Less money is being created, so less jobs are being created,” says St. Just. “How can I confidently invest in this market?”
The photos look moody, but many Predict recession, St. Just said the economy is in a better position than in 2008. “A healthy balance sheet in the banking industry is generally healthy,” he said. “There is little credit risk and there is not much excess inventory buildup. There is no overbuilding, so there is not as much risk as in the last recession.”
In a recent investor survey, St. Just asked what would have the greatest impact on stocks for the rest of the year. “100% of people said the macro [economic forces]”Saint Just said. “It’s clear that interest rates and the fear of a recession have hit the market. Unfortunately, that’s what comes to people’s minds and probably continues to weigh on stocks.”