Business & Investment

Three real estate stocks to buy when the housing bubble bursts completely

The housing bubble is shrinking. Much better than the “pop” of the bubble, but the long-term effects are relatively similar.One of our effects May We see some real estate stocks currently supported by the unnaturally strong housing market momentum being discounted.

If you think some real estate stocks will fall when the bubble bursts completely and the housing market is close to “normal,” you need to consider three things.

Strong growth stock

FirstService (TSX: FSV)(NASDAQ: FSV) Based in Toronto Real estate technology A service company that happens to be one of the strongest growth stocks in the sector. There are two major business units and some strong brands under its banner. The company generates about 50% of its revenue from First Service Residential, and this exposure to the housing market can impact equities as the market shrinks to a reasonable size.

FirstService shares have returned more than 300% to investors in the last five years alone, and their growth is eerily consistent. But the best part about First Service growth is that equity growth overlaps very well with revenue growth. Aside from the old revenues from 2007 to 2009, the company has consistently grown revenues each year.

Apartment REIT

Housing assets, especially some of the country’s most popular housing markets, have seen a rapid increase in value over the last two years. But now that the bubble is shrinking, some of those assets may be revalued for pricing. If that happens, Apartment REIT favorite Mintha Apartment REIT (TSX: MI.UN) can be slightly depressed.

The majority of Mentha’s 29-property (and 7,245 suite) portfolio is located in three cities: Ottawa, Toronto and Montreal. In 2020, REITs saw a sharp decline in profits achieved with new leases, but there are still quite a few suites that need to be relocated.

REITs currently offer a modest yield of 1.8%. But to balance that, REITs offer the possibility of a decent capital valuation. It increased its market value at a considerable pace before the pandemic occurred. Stock market crashed.. It is also fairly well appreciated now.

Mixed-use REIT

First Capital REIT (TSX: FCR.UN) is one of Canada’s leading multipurpose real estate developers and operators. Located in the suburbs of 150 cities, it has a corporate value of $ 8.3 billion. The company focuses on strategic locations, most of which are located in densely populated areas, just five minutes from public transport.

Thanks to its portfolio, the FCR may see a devaluation and a decline in stock prices when the housing market cools properly. Currently, the stock price is a bit overvalued, but it offers a higher yield than Mint (2.3%). The potential for capital appreciation is not very strong. However, if you buy it during the dip, you will get both better shots and slightly higher yields with recovery-supported growth.

Stupid takeaway

The housing bubble is shrinking and can hurt the economy. For the past 12 months, the housing market has been one of the main catalysts for economic recovery. But the pandemic is now really behind, and other sectors like travel and leisure could fill the gap left by the glowing housing market.

This article represents the opinion of a writer who may disagree with the “official” recommendation position of the Motley Fool Premium Services or Advisors. We are Motley! Asking investment treatises, even our own treatises, can help you think critically about your investment and make decisions to be smarter, happier, and richer. As a result, we may publish articles that may not match recommendations, rankings, or other content. ..

Stupid contributor Adam Ottoman There are no positions in any of the listed stocks. Motley Fool is FIRST CAPITAL REALTY INC. And First Service Corporation, SV is recommended.

Three real estate stocks to buy when the housing bubble bursts completely Three real estate stocks to buy when the housing bubble bursts completely

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