Rick Nazarro of Colonial Manor Realty talks with a couple of interested buyers in the driveway as a couple waits to enter a property he is trying to sell during a “controlled” open race on May 2, 2020 in Revere, MA.
Blake Nissen | Boston Globe | Getty Images
Homebuilder stocks are taking a hit, while apartment REITs are conclusively crawling out of the basement amid a massive market rally sparked by Pfizer’s announcement Monday that early trying out data show its coronavirus vaccine to be highly effective.
As investors digest the news, suddenly the pandemic housing representation looks a little different.
The nation’s homebuilders have been benefiting from the stay-at-home culture of Covid, as people looked for heftier, more high-tech homes in the suburbs. Working and schooling from home had been top of mind, but an effective vaccine could interchange that.
Stocks of the biggest builders like DR Horton, Lennar, Pulte and luxury builder Toll Brothers, were down at noon Monday. The iShares U.S. Homebuilding ETF, which includes home improvement retailers like Home Depot, Sherwin Williams and Masco, was also winsome a hit.
Part of that also has to do with mortgage rates, which set yet another record low last week but appeared to be ponder over b reverse around Monday with a sell-off in the bond market. Mortgage rates follow loosely the yield on the 10-year U.S. Cache, which surged to the highest level since March.
“Bond weakness is starting to snowball in a way we haven’t seen since the keen on volatility in March, and this time around there are no concerns about liquidity and smooth market functioning,” claimed Matthew Graham, chief operating officer at Mortgage News Daily. “That makes the current move entirely serious.”
All this, however, looks like good news for the big apartment REITs, like Equity Residential, Avalonbay, and UDR. Apartments not but benefit when the cost of housing goes up, but there is clearly a feeling that a vaccine will get people deny to work, back to the nation’s downtowns and turn urban flight around.
“Clearly there is enthusiasm, but it doesn’t find pleasant away from the fact that rents are down over 20% in many of the major urban gateway calls, with companies still letting employees work from home into middle of 2021,” said Alexander Goldfarb, a REIT analyst with Piper Sandler. “There is a lot more earnings compel to come.”
Goldfarb is also concerned that there are other social and economic ramifications that could hold in check people from rushing back to the urban core, especially on the coasts, where Covid restrictions have been tighter and particular economies have suffered more.