Market Cycles

Housing Won't Haunt Real Estate, or Stocks

By, 09/29/2006

Most people think of just housing when they read about real estate. Big mistake. Residential property is certainly the media's focus right now, but the truth shows that residential is only part of the overall real estate market. Commercial real estate (office buildings, strip malls, storage, manufacturing, etc.) is also a significant portion of the equation. Year-over-year commercial real estate is growing at a healthy 16% clip, while residential has declined only 3%. What's more, while residential investment shaved 0.7% from the most recent GDP numbers, commercial real estate added 0.6% -- nearly offsetting the residential decline in full. While headlines show housing starts falling over 25% since the recent peak in January, the annualized rate of 2.3 million units is still 30% higher than the highs set in 1999.

Ignore the spooky stories. The US housing market won't haunt equity markets, and total real estate is holding up just fine. Here's a parting thought: The last time existing home prices were down year-over-year was 1995. That year the S&P 500 was up over 35%!

*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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