The Best Real Estate Investment No One's Looking At

Dear subscriber,

Homeownership has long been a cornerstone of the American dream.

But these days, it seems we're forced to rewrite that dream... and abandon the goal of owning a home.

Because when it comes to housing prices, well... it's insane out there.

My colleague Josh Baylin recently asked a successful longtime mortgage broker how young people are getting into the housing market.

The two were playing a round of golf on the championship La Costa golf course in beautiful – and expensive – Carlsbad, California. For dozens of miles around, starter homes cost more than $1 million.

The mortgage broker's answer was simple: "They're moving."

"What 35-year-old, starting a family, has saved up $300,000 for a down payment on a home?" he added.

That's an extreme example, of course. (And California is widely known for having the highest housing costs.) But it's the same story all across the U.S.

Houses cost so much today that the median age of a first-time homebuyer is now 40 years old. By comparison, for the past three decades or so, the median first-time homebuyer was in their early 30s.

From an investing standpoint, when prices are rising... that's when you want to buy.

But you may be surprised to hear that no one is investing in real estate. With so few buyers and sellers and homebuilding at a standstill, real estate markets have been mostly left for dead.

As I'll explain today, that's changing. One particular corner of the real estate market is finally showing signs of life – and for those paying attention, it's setting up a huge opportunity.

I'm talking about real estate investment trusts ("REITs").

For those unfamiliar with this kind of investment, REITs are companies that own and operate real estate in the pursuit of rental income.

There are REITs that buy and operate apartment buildings, offices, shopping malls, storage units, data centers, cellphone towers, and more.

These companies have a special tax structure that allows them to pay little to no corporate tax, as long as they pass most of their income on to investors.

In short, they're a one-click way for institutional and everyday investors to hold real estate in their brokerage account without having to actually manage or finance a property themselves.

No big down payments. No deadbeat tenants. No leaky toilets.

As you can see, even as property prices have soared, REITs – as measured by the MSCI U.S. REIT Index – have been left out of the broader market's bull run. That's true both in 2025 and over the past three years...

Historically, REITs have been a great way for investors to invest in real estate and generate income.

But even in our income-focused advisory, Income Intelligence, we haven't found a compelling property REIT in a while. REITs just weren't moving.

But as I mentioned, that's changing. REITS are staging a comeback. And investors who've been waiting patiently will be rewarded...

'Cheap, Hated, and in an Uptrend'

Here's what I see happening now...

First, REITs are starting to move higher. Plain and simple.

If you're a technical trader, the 50-day moving average ("DMA") on the MSCI U.S. REIT Index has passed above the 200-DMA.

This generally indicates an uptrend. And using this signal alone would've rarely steered you wrong over the past 15 years, each crossover signaling a continued rise (with the 2022 bear market being a big exception)...

We see another signal in our more proprietary indicator.

In Income Intelligence, we have a special measure called our Income Triggers that tells us when certain income-paying assets offer good yields and have solid momentum. The system works... and today, it likes REITs.

But there's more to it than simple technicals...

Warehouse and logistics REITs, like Prologis (PLD), have started to rise...

Health care REITs like Ventas (VTR) – which owns medical offices, senior-living facilities, and hospitals – are taking off, as well...

And classic residential plays, like Equity Residential (EQR), are now reversing their slow decline...

Yet, despite their recent move, REITs are still remarkably cheap today.

The S&P 500 Index trades at 25.5 times earnings. The MSCI U.S. REIT Index trades at just 16.8 times earnings. That's the biggest this spread has been in more than 20 years...

That's because investors have completely forsaken REITs.

Yes, it's fun to hop on the hot trend. But skilled investors know the opportunities lie where no one is looking.

And no one is looking at REITs.

According to data from Bank of America, institutional money managers' net allocation toward REITs has dropped to levels seen in the wake of the global financial crisis, when real estate (and REITs) were shunned as toxic assets.

As my longtime colleague Brett Eversole would say... this is a classic "cheap, hated, and in an uptrend" setup.

Two Big Reasons REITs Will Continue Higher

There are two big fundamental tailwinds that will send REITs higher...

First... interest rates are falling.

The Federal Reserve has broadly been on the path toward lower interest rates. And the yield on 10-year government Treasurys has dropped from 4.3% in August to close to 4% today.

Interest rates matter for REITs. When investors can earn less in bonds, the yield you get from REITs looks more attractive, and investors buy them up.

Also, property values rise when interest rates are low, which increases the value of REITs' property holdings.

The second tailwind... the fundamentals just look good.

Across the industry, REITs have been growing their income at about 2.8% per year for about three years now. Occupancy rates are strong at 90%. And rental rates are on the rise.

This is the perfect setup.

In the chart below, you can see that individual investors have completely forsaken REITs over the years. REITs took off during the housing boom. But since then, they've slowly commanded a smaller portion of investor portfolios (using the market share of exchange-traded funds ("ETFs") as a proxy for investor portfolios)...

If you're one of those investors, now's the time to change that. REITs can offer protection against many of the threats you face in the market today.

For instance... if the AI bubble pops, real estate looks like a great play with solid upside. If you're concerned about affordability, hedge some of it away by owning real estate. If the dollar continues to decline, real estate will increase in value. And if you're worried about tariffs, no one pays tariffs on rent.

All the pieces are in place for a big move higher. So keep looking where Wall Street isn't.

To hear more about REITs – including my conversation with one of the foremost REIT experts in the world – check out today's This Week on Wall Street video. We talk about all the fun things you can invest in, including some specific REIT ideas.

You can watch the entire episode on our YouTube page by clicking the image below. Be sure to like and subscribe to get more of our videos.

What Our Experts Are Reading and Sharing... 

• The early holiday shopping data is in. The headline number says that sales were up – but a lot is due to higher prices (read: inflation). Here's our own Corey McLaughlin breaking down Black Friday and Cyber Monday in the Stansberry Digest.
• Two stories battling for your attention today... Meta Platforms (META) announced it would scale back its spending on the metaverse by about 30%. CEO Mark Zuckerberg thought the metaverse was the next big thing and spent billions, but it has been a flop so far. Shares rose on the news. Next, it looks like Netflix (NFLX) has won the bidding war for Warner Bros., with a $72 billion cash-and-stock deal.
• Two weeks ago, I mentioned how Japanese bond yields had surged as investors sold off government debt. Now, the Bank of Japan is hinting at a coming interest-rate hike.

New Research in The Stansberry Investor Suite...

How'd you like to buy one of the best wealth-creating stocks in the market... at a huge discount?

This month in Stansberry's Investment Advisory, Whitney Tilson and the team are doing just that – with a business that has a long history of being a "compounder."

See, over the past 30 years, this company has returned 19% per year... a rate better than even Microsoft (MSFT).

Its operating margin has expanded to more than 35%... outpacing even Alphabet (GOOGL).

And its free-cash-flow margins recently reached a record of 30%.

This is the kind of company you want to hold for the next decade.

Yet, shares have slumped nearly 40%.

As Whitney explains, investors have forsaken this company, believing that its competition will continue to steal market share.

That gives the team the perfect opportunity to swoop in and buy a stock trading for cheap... when it should be trading at a premium.

Stansberry Investor Suite subscribers can read the entire report here.

If you don't already subscribe to The Stansberry Investor Suite – and want to learn more about our special package of research – click here.

Until next week,

Matt Weinschenk
Publisher and Director of Research

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