3 Overpriced REITs Headed for a Fall

Real estate investment trusts (REITs) are on fire—and we need to be very careful not to get burned. Yellow Light on Some (but not all) REITs Look above and you’ll see what I mean—the Vanguard Real Estate ETF (VNQ), in blue, has topped the S&P 500 on price returns alone. That’s a monster run for income investments like REITs. More REIT Gains to Come—But Be Cautious Here’s the twist: there’s plenty more upside ahead—and you can thank the Fed for that. Its latest rate cuts will keep powering REITs higher, for two reasons: Lower rates cut REITs’ borrowing costs, and these trusts (owners of everything from senior-care centers to cell towers) need lots of borrowed cash to buy new buildings and upgrade current ones. … Read more