Canadian REIT Firesale – No Decoupling From US Real Estate January 29, 2008Posted by DustinRJay in stocks.
Tags: Canadian real estate, decoupling, REIT, US real estate
Both Canadian and American real estate investment trust indices have performed extremely poorly over the past three quarters. Canadian real estate investment trusts are down roughly 25% from peaks in early 2007. This is very similar to the performance of US real estate investment trusts. If investors expected Canadian real estate to outperform American real estate, the indices should have diverged.
The following graph is a comparison of Canadian vs. American real estate investment trust indices:
One possible reason for the repricing of Canadian REIT’s is that both Canadian and US real estate prices have roughly doubled since 1995 and this has raised the same concerns of overvaluation that are present in the US markets.