REITs Up 30 Percent, Enjoy Record-Setting 2006

Savvy investors are those that had their money in REITs this year.
By: Diya Gullapalli: REALTOR® Magazine Online
Real estate-focused mutual funds are turning out to be the best investment decision anyone could have made in 2006.

Real estate investment trusts (REITs) have risen more than 30 percent this year, compared with 13 percent for the Standard & Poor’s 500-stock index.

Even most of the worst real-estate funds have delivered twice as much as the average U.S. stock fund in the past year.

Real-estate watchers are generally predicting a favorable outlook for REITs in the next year. A Goldman Sachs Group Inc. report last month predicted a continued recovery of occupancy and rental rates.

And this fall, fund-researcher Morningstar Inc. noted plusses for REITs like high home prices forcing more people to rent, making it a landlord's market. At the same time, high prices for commodities needed to build new properties has kept the supply of new buildings low.