The S&P500 introduced a major change in September. It was one of the most significant changes since 1999. The Real Estate Sector is now separate and no longer a part of the Financials Sector.
A Brief Introduction
The Real Estate Sector is now the 11th S&P500 sector, with a market capitalization of almost $45 billion. 95% of the sector is REITs, and 5% is publicly-traded real estate management and development companies.The change will raise the real estate industry’s profile as an area for investment. It will also make the sector’s performance more explicit. Real estate has performed well compared to many financial market segments, but the recognition of that performance has been diluted because it was not separate. This will change.
Some Changes You May Expect
about $8 billion, and JPMorgan Chase estimates the number will be around $100 billion. Other analysts’ expectations fall in between those two, but they all agree that you will see more 401k-type investments going into this new sector.The reasons for the increased inflow include:
• The Real Estate Investment Trust market did not implode after 2008 in the way many financial markets did.
• It has performed well since the economic recovery began. As of August, the All Equity REITs Index yielded 3.61% compared to the S&P’s average of 2.11%.
• The sector’s economic drivers are distinct, so they are easy to follow.
• It gives professional investment managers another sector to use to balance their portfolios.
• New construction is booming.
Some Likely Effects of the Sector’s Launch
• Investors will pay more attention to the real estate sector.
• Investments in the real estate market sector will increase.
• You are likely to see greater diversification, and this will lead to greater stability in the market.
• You will see new real estate investment products coming to the market.
• More private real estate companies will go public.
• Real estate market cycles should be less severe.
Some Ways Realtor’s Can Benefit
• Write about the new sector in your newsletter, in your Facebook forum and on your LinkedIn page. An article of this sort will help to confirm your place in your followers’ minds that you are at the forefront of this industry, and you are someone whose opinion and advice they should listen to.
• Use the news as a way to advertise your own skills as a Realtor. Not everyone will just want to add to their investment portfolio. Many will be attracted to the idea of real estate investing and will respond by buying property.
• Angle your advertising to show you are at the forefront of your local market by using this new investment sector as a way to attract more business to your practice. Give your listing advertisements an added punch; increase traffic to your open houses; offer a free report on this new sector to everyone who visits your website; lead a seminar on the subject to grow your contact list.
• Include simple extras to what you already do, so people contact you rather than your competition. As well as having open house balloons, add something that will make passers-by stop and call in. Have an extra line printed on your business cards that invite everyone to get the report from your website.There will be many effects of this new sector’s launch, so think about how and your associates can make the most of them.