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American Century Investments Senior V.P. Steven Brown explains how you can profit from investing in real estate.
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Right -- the real estate market has been a bright spot for investors -- at least in the last few quarter herself flashing mild signs of potential recovery in the sector.
But this week we saw some mixed data coming out from the home builders leaving some investors it's just slightly optimistic David so well.
Housing continued to climb this year or is this the end of the rally joining us now Steve -- -- American Century Investments senior vice president.
Stephen you're -- claw your way back up -- fall Ed must be so discouraging to see when -- there's some bad news but.
That the overall question about -- I think -- and whether or not they've sort of shaken off.
The stigma of the sub prime debacle do you think that's happened or -- people still have that their minds.
I I think they shaken off -- of -- perspective because they put up some good returns for the last couple years.
So I think what you will see is that commercial real -- been in recovery vote for copiers housing which you mentioned -- heated topic is.
-- bottomed out of the fourth quarter of 2011 so it's just coming out of the of the worst housing market practice -- 1937.
So they're still questions about the housing market recovery.
But in terms of pressure real estate -- they've -- -- pretty well for a couple of years now.
So are you recommending only going to the commercial reits space -- are you also is strong and the residential.
Well we we have every fun but we on some homebuilders and the fund because we think housing fundamentals the bottom again the second half of eleven.
And -- and probably the second inning of -- three to five recover recovery in housing.
And we think that home prices could appreciate 68% yeah there are of course not all commercial real estate is the same you have -- commercial real state in Manhattan and then you have the malls out.
Outside of Manhattan.
And you have it's things like the apple stores and you're not too big on apple stores right now aren't well what we've seen is that apple stores of any huge home -- -- and midtown new Yorker and any top regional -- sometimes they -- -- 6008000.
Dollars per -- -- -- -- good mall there's a hundred -- -- -- been a huge -- run with comp store sales of 20% or so but but what happened is that the with the -- Not a lot new product launches coming out and just massive current sales is going to be hard to have.
Double digit comp store sales or apple stores -- 2013 cents at having -- the growth of the say fifteen to 20% in 2013.
Maybe -- flap about the negative back erupt tops your sales -- is -- -- that's right I wanna point out that the REIT index delivered more than 20%.
In 2012 so.
You know looking into 2013.
Do you see as robust growth coming from that's -- -- What we see this year is we've got -- very good commercial real estate fundamentals the United States that the -- period and supply.
We've got a constructive lending environment in the current environment is actually pretty good -- -- -- of the higher the lenders are are back -- again.
And then third -- -- have a good dividend they have that 3.4 percent chromatic outrage and I spent so when we think that what's gonna work in 2013.
I think rates have good earnings performance than any of the growth and we think -- -- we we think they can deliver an eight to 10% of return for clients based on income.
In -- appreciation but based on rising rents the jobs picture is still lousy no matter how you cut -- seven point 9% unemployment is -- If if that in troops and I don't see a particular cited improved dramatic but if fed does wouldn't that be huge -- beat to the reits -- if we had if we had dead.
Job growth -- say a 175000.
A month to so 2013.
That be a boon for the economy.
-- be a boon for just under said that because that's not a lot more than what we have but it usually -- the -- nice solid pace but that we advocates for the economy it'd be good for.
Stocks and be good for reits is of being demand is is growing in the US at a higher than expected pace.
The -- pretty excited about that have a job good.
Few seconds but you don't like met in Manhattan market right I did not the right thing we've been reporting on that yet but what we've said is that New York real estate has -- been very strong New Yorkers -- the first here's the country recover because -- they -- the -- -- rate got.
-- financials took off.
But what's happened is the rate of economic improvement near historic slowdown -- other parts of the US like the energy bill.
From Denver Houston is really ripping right now of those is that New York is is not the most exciting economics -- -- country right now.
Other parts the US are the energy -- and actually areas of this and home -- booming on on the southeast.
-- -- Condo market New Yorkers really stronger that's not really every product.
-- -- -- there are your geographic mix there from.
Colorado out of Southern California and Texas it's don't think you Steve Brown -- thank -- thanks a lot.
