2024 Buy or Hold Real Estate Stocks?

Amid the height of the winter season, many homebuyers and sellers are having warm thoughts about the housing market amid the recent mortgage rate reduction. This development suggests a possible resurgence in the real estate market in the foreseeable future.

Therefore, real estate stocks Hang Lung Properties Limited (HLPPY – Get Rating) and Guild Holdings Company (GHLD – Get Rating) could be wise portfolio additions, given their solid growth trajectory and profitability. Conversely, investors could hold CBRE Group, Inc. (CBRE – Get Rating) and wait for a better entry point in the stock.

During the earlier stages of the inflationary cycle, the Federal Reserve introduced aggressive interest rate hikes. However, as inflation begins to decelerate and approaches its official 2% target, housing economists anticipate that the end of this tightening cycle may be in sight.

A lack of property inventory, soaring house prices, and escalated mortgage rates deterred many prospective homebuyers in 2023. The current trajectory of monetary policy should reduce mortgage rates, aligning with the onset of the spring housing market surge. Given that the real estate sector is notably reactive to shifts in interest rates, it is well-positioned for potential advancement in the future.

Recent developments in the mortgage rate – witnessing the most rapid reduction in decades – signal a revival within the property market by ushering numerous prospective home buyers back into the fray, thus setting the stage for a market resurgence as we edge toward 2024.

CJ Patrick Company’s founder and CEO, Rick Sharga, forecasts up to 800,000 property transactions during 2024’s first quarter, many of which are likely to proceed swiftly from listing to sale in under 25 days. The National Association of Realtors’ chief economist, Lawrence Yun, foresees an uptick to 5.5 million combined new and existing home sales in 2024, up from 4.8 million in 2023.

U.S. single-family homebuilding rose to over an 18-month high in November. It could gain further momentum, with declining mortgage rates coupled with builder incentives likely to entice potential buyers back into the housing market.

Amid the positive macroeconomic developments, builder sentiments are radiating an undeniable optimism. The NAHB/Wells Fargo Housing Market Index recorded a three-point increase in December, reaching a level of 37. The NAHB anticipates ongoing improvements in the future.

Consequently, the global real estate market is projected to reach $5.85 trillion, expanding at a CAGR of 5.2% by 2030.

Given this backdrop, it’s time to examine the fundamentals of the three stocks within the Real Estate Services industry, starting with…

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