How many Americans own REITs?
According to new research from Nareit, the association representing publicly traded real estate companies, 168 million Americans, roughly 50% of all U.S. households, have some exposure to public REITs. That ownership comes in direct stock ownership or through mutual funds, ETFs or target date funds that include REITs.
168 million Americans live in households that own REIT stocks.
Market cap of REITs in the U.S. 2019-2023, by property type
As of December 2023, the market cap of the index was 1.3 trillion U.S. dollars, up from 1.2 trillion U.S. dollars in December 2021.
Let's look at what percentage of Americans own stocks or real estate. It's not as high as you might think. According to the latest Gallup poll, only about 54% of Americans own any stocks. Meanwhile, only about 63% of Americans own real estate according to the Census Bureau.
# | Name | M. Cap |
---|---|---|
1 | Prologis 1PLD | $95.73 B |
2 | American Tower 2AMT | $79.99 B |
3 | Equinix 3EQIX | $70.98 B |
4 | Welltower 4WELL | $53.97 B |
Buffet and REITs
However, Berkshire sold its holdings of STORE Capital in 2022 after the company announced it was being acquired by two outside investment funds. Since then, filings have shown that Berkshire Hathaway has not owned shares of any other REIT.
How to Qualify as a REIT? To qualify as a REIT, a company must have the bulk of its assets and income connected to real estate investment and must distribute at least 90 percent of its taxable income to shareholders annually in the form of dividends.
While higher rates negatively impacted nearly every sector of the economy in 2022 and most of 2023, real estate was hit especially hard. Rising interest rates hurt not only the value of REITs' property holdings but also the cost of debt to finance those properties or even refinance already-owned assets.
The five largest REITs in the United States in 2021 are: American Tower Corporation, Prologis, Crown Castle International, Simon Property Group and Weyerhaeuser.
This model originated in the United States - the largest REIT market worldwide. European countries with an established market include the UK, Belgium, and France. In the Asia-Pacific region, the biggest markets are Japan, Hong Kong, and Australia. In Japan, public REITs held 11.5 trillion Japanese yen in 2022.
What percentage of millionaires own real estate?
Real estate investment has long been a cornerstone of financial success, with approximately 90% of millionaires attributing their wealth in part to real estate holdings. In this article, we delve into the reasons why real estate is a preferred vehicle for creating millionaires and how you can leverage its potential.
The median value of stocks directly held by American families in 2022 was $15,000, the lowest value on record and nearly $14,000 lower than the median value recorded in 2019 (in 2022 dollars).
Gold prices are known to be more volatile compared to real estate. The precious metal can experience rapid fluctuations in value, driven by geopolitical events and changes in supply and demand. Real estate, on the other hand, tends to be more stable over the long term.
“I recommend REITs within a managed portfolio,” Devine said, noting that most investors should limit their REIT exposure to between 2 percent and 5 percent of their overall portfolio. Here again, a financial professional can help you determine what percentage of your portfolio you should allocate toward REITs, if any.
Among the 50 real estate investment trusts (REITs) with the largest market cap, Prologis (PLD) and American Tower (AMT) recorded to the at the top of the list with around 93 and 83 billion US dollars each. The REITs sector reported a decrease in 2022, with the after the market cap reached record high the previous year.
The lack of government regulation makes it difficult for investors to evaluate them since little to no information is available publicly. Also, they are not required to prepare audited financial statements.
Buffett avoids real estate investments due to precise pricing, lack of competitive edge, complex management and corporation tax disadvantages. However, he considers investing in real estate during crises or via REITs, offering diversification, liquidity and expert management.
However, he knows it doesn't make sense for him to get into the business of being a landlord. Buying and managing real estate is more of a business than it is an investment, and Buffett knows that his time is better spent choosing companies to invest in than it is running a real estate business.
REITs should generally be considered long-term investments
This is especially true if you're planning to invest in non-traded REITs since you won't be able to easily access your money until the REIT lists its shares on a public exchange or liquidates its assets. In many cases, this can take around 10 years to occur.
There is no set lifetime for the trust in most cases. Investors who buy publicly traded shares in a REIT can usually buy as much or little as they like and dispose of the shares when they want or need to. However, if an investor buys a non-traded or private REIT, the investment should be considered illiquid.
What is bad income for REITs?
For purposes of the REIT income tests, a non-qualified hedge will produce income that is included in the denominator, but not the numerator. This is generally referred to as “bad” REIT income because it reduces the fraction and makes it more difficult to meet the tests.
By law, 75% of a REITs asset must be invested in real estate. The market value of the property owned by the REIT offers a bit of protection, as long as the value of the property doesn't go to zero. That's not to say that REIT values can't go down, though.
A lot of REIT investors focus too way much on the dividend yield. They think that a high dividend yield implies that a REIT is cheap and a good investment opportunity. In reality, it is often the opposite, and the dividend does not say much, if anything, about the valuation of a REIT.
Can You Lose Money on a REIT? As with any investment, there is always a risk of loss. Publicly traded REITs have the particular risk of losing value as interest rates rise, which typically sends investment capital into bonds.
Direct real estate offers more tax breaks than REIT investments, and gives investors more control over decision making. Many REITs are publicly traded on exchanges, so they're easier to buy and sell than traditional real estate.
References
- https://finance.yahoo.com/news/1-warren-buffett-etf-could-100000820.html
- https://www.hindustantimes.com/business/us-billionaires-sell-11-billion-in-stock-what-are-jeff-bezos-mark-zuckerberg-up-to-is-a-financial-disaster-looming-101710144481684.html
- https://warrenbuffettbookreport.weebly.com/weaknessesdownfalls.html
- https://finance.yahoo.com/news/57-7-warren-buffetts-375-112600155.html
- https://www.ramseysolutions.com/retirement/can-you-retire-on-1-million
- https://www.nasdaq.com/articles/does-warren-buffett-invest-in-reits
- https://www.usatoday.com/money/blueprint/investing/warren-buffett-berkshire-hathaway-portfolio/
- https://www.reit.com/news/blog/market-commentary/hike-stop-and-bounce-reit-performance-after-monetary-policy-tightening
- https://finance.yahoo.com/news/warren-buffett-reveals-instructions-invest-163624653.html
- https://www.gurufocus.com/news/2050397/why-warren-buffett-steers-clear-of-real-estate
- https://www.investors.com/research/warren-buffett-stocks/
- https://www.investopedia.com/terms/b/berkshire-hathaway.asp
- https://www.fool.com/investing/how-to-invest/famous-investors/warren-buffett-investments/stocks-owned/
- https://finance.yahoo.com/news/nancy-pelosi-takes-position-palo-140009392.html
- https://finance.yahoo.com/news/15-best-dividend-stocks-buy-133536774.html
- https://companiesmarketcap.com/reit/largest-reits-by-market-cap/
- https://money.usnews.com/investing/articles/top-nancy-pelosi-stocks-to-buy
- https://admiralmarkets.com/education/articles/shares/the-best-performing-stocks-in-history
- https://www.theinvestorspodcast.com/warren-buffett-investment-strategy/module-2/warren-buffetts-4-rules/
- https://en.wikipedia.org/wiki/Canadian_National_Railway
- https://www.theinvestorspodcast.com/legend-investors-stock-portfolio/bill-gates-stock-portfolio/
- https://seekingalpha.com/article/4675769-this-could-be-the-best-time-in-my-lifetime-to-buy-reits
- https://www.investopedia.com/ask/answers/021615/why-doesnt-berkshire-hathaway-pay-dividend.asp
- https://finance.yahoo.com/news/15-best-dividend-stocks-buy-200241053.html
- https://www.statista.com/statistics/1347276/market-cap-reits-usa-by-property-type/
- https://finance.yahoo.com/news/time-high-nvidia-stock-still-110200267.html
- https://finance.yahoo.com/news/44-warren-buffetts-366-billion-090600456.html
- https://finance.yahoo.com/news/14-money-making-stocks-invest-134504176.html
- https://www.cnbc.com/2018/08/16/warren-buffetts-warning-on-walmart-better-stocks-than-retailers.html
- https://finance.yahoo.com/news/10-000-3-elite-growth-194337998.html
- https://www.experian.com/blogs/ask-experian/pros-cons-investing-in-reits/
- https://www.forbesindia.com/article/explainers/top-10-companies-india-market-valuation/86307/1
- https://www.investopedia.com/articles/mortgages-real-estate/10/real-estate-investment-trust-reit.asp
- https://www.linkedin.com/pulse/what-real-estate-creates-90-millionaires-ben-lovro
- https://www.investopedia.com/investing/can-you-make-money-stocks/
- https://www.tipranks.com/stocks/amzn/forecast
- https://finance.yahoo.com/news/much-money-invest-reits-123349621.html
- https://www.statista.com/topics/10665/reits-market-worldwide/
- https://www.newtraderu.com/2024/01/09/current-warren-buffett-car-2024-what-car-does-this-billionaire-own/
- https://wallethub.com/answers/ci/who-owns-geico-insurance-1000045-2140683736/
- https://www.investopedia.com/articles/investing/072314/investing-real-estate-versus-reits.asp
- https://blog.massmutual.com/retiring-investing/reits-portfolio-invest
- https://finance.yahoo.com/news/2-warren-buffett-stocks-buy-084700331.html
- https://investorplace.com/2024/02/the-3-best-buffett-bank-stock-picks/
- https://www.wealthprofessional.ca/news/industry-news/the-best-reits-to-invest-in-canada-for-2023/380850
- https://www.quora.com/Does-Warren-Buffett-use-a-broker-to-invest
- https://www.financialpoise.com/the-reit-income-for-retirement-6-reasons-to-invest-in-reits/
- https://www.tickertape.in/blog/most-expensive-stocks-in-india/
- https://www.sofi.com/learn/content/reit-investing-pros-and-cons/
- https://www.indmoney.com/articles/most-expensive-stocks-in-the-world
- https://learn.apmex.com/investing-guide/investment-in-land-vs-gold-guide/
- https://www.cnbc.com/select/what-to-know-about-reits/
- https://www.nasdaq.com/articles/if-you-invested-in-apple-when-warren-buffett-did-heres-how-much-you-would-have-made
- https://www.investopedia.com/warren-buffett-4689826
- https://www.gurufocus.com/news/247932/bill-gates-foundation-buys-mcdonalds-exxon-mobil-caterpillar-inc-sells-procter-gamble-air-products-chemicals
- https://trendspider.com/markets/congress-trading/
- https://www.quora.com/Do-you-feel-bad-for-Warren-Buffet-s-kids-because-they-re-only-inheriting-1-of-his-net-worth
- https://www.forbes.com/advisor/investing/best-warren-buffett-stocks/
- https://www.fool.com/investing/2024/04/18/could-this-undervalued-stock-make-you-a-millionair/
- https://www.investopedia.com/ask/answers/021615/does-warren-buffett-invest-gold-why-or-why-not.asp
- https://www.investopedia.com/world-s-11-greatest-investors-4773356
- https://www.fool.com/the-ascent/buying-stocks/articles/starting-to-invest-in-2024-heres-how-much-youll-need-to-become-a-millionaire-in-30-years/
- https://fortune.com/2023/06/22/warren-buffett-donates-five-billion-wealth-net-worth/
- https://www.nasdaq.com/articles/does-warren-buffett-invest-in-gold
- https://www.reit.com/research/nareit-research/170-million-americans-own-reit-stocks
- https://qz.com/at-92-warren-buffett-has-led-berkshire-hathaway-to-its-1850712281
- https://www.nasdaq.com/articles/heres-why-2024-could-be-great-for-reits:-4-stocks-to-buy-now
- https://corporate.vanguard.com/content/corporatesite/us/en/corp/who-we-are/sets-us-apart/index.html
- https://time.com/personal-finance/article/how-to-invest-20k/
- https://www.fool.com/investing/2023/11/22/3-incredible-warren-buffett-dividend-stocks-to-buy/
- https://www.realized1031.com/blog/do-reits-have-a-limited-lifespan
- https://seekingalpha.com/article/4673082-what-i-wish-i-knew-before-investing-in-reits
- https://www.beefmagazine.com/market-news/bill-gates-is-john-deere-s-largest-shareholder
- https://www.statista.com/statistics/1347492/total-return-largest-reits-usa/
- https://www.fool.com/investing/2024/02/07/warren-buffett-investments-recommends-most/
- https://www.cnbc.com/berkshire-hathaway-portfolio/
- https://rsmus.com/insights/services/business-tax/reits-must-be-aware-of-the-unique-tax-rules-for-hedging-instrume.html
- https://www.fool.com/research/how-many-americans-own-stock/
- https://corporatefinanceinstitute.com/resources/career-map/sell-side/capital-markets/risk-factors-of-investing-in-reits/
- https://money.usnews.com/investing/articles/best-reits-to-buy
- https://www.kiplinger.com/investing/stocks/warren-buffett-stocks-berkshire-hathaway-portfolio
- https://www.morningstar.ca/ca/news/234575/what-happens-if-a-companys-stock-falls-to-zero.aspx
- https://www.nasdaq.com/articles/3-smart-penny-stocks-with-huge-potential
- https://www.fool.com/investing/2023/11/28/why-is-warren-buffett-selling-amazon-stock-instead/
- https://www.usatoday.com/story/money/columnist/krantz/2012/10/25/reit-real-estate-property/1637063/
- https://www.benzinga.com/general/education/23/03/31504517/if-you-invested-1-000-in-coca-cola-stock-when-warren-buffett-did-heres-how-much-youd-have-now
- https://finance.yahoo.com/most-active
- https://www.gurufocus.com/guru/warren%2Bbuffett/current-portfolio/portfolio?view=table
- https://www.tipranks.com/stocks/tsla/forecast
- https://www.sec.gov/files/reits.pdf
- https://markets.businessinsider.com/news/stocks/warren-buffett-bank-stocks-sales-portfolio-berkshire-hathaway-financial-crisis-2023-10
- https://www.bankrate.com/investing/highest-priced-stocks/
- https://www.tipranks.com/stocks/ko/forecast
- https://en.wikipedia.org/wiki/List_of_public_REITs_in_the_United_States
- https://www.investors.com/etfs-and-funds/sectors/sp500-one-investor-is-the-largest-owner-of-two-thirds-of-u-s-companies/
- https://finance.yahoo.com/news/warren-buffett-2024-portfolio-top-124751777.html
- https://www.fool.com/investing/2023/10/31/want-to-become-a-stock-market-millionaire-heres-ex/
- https://www.gobankingrates.com/investing/stocks/most-expensive-stock/
- https://www.financialsamurai.com/what-percentage-of-americans-own-stocks-or-real-estate/
- https://www.cnbc.com/2018/08/30/amazon-set-to-open-above-2000-a-share-for-the-first-time.html
- https://www.businessinsider.com/how-warren-buffett-spends-money-net-worth
- https://finance.yahoo.com/news/warren-buffett-doesnt-buy-real-210038043.html
- https://www.bankrate.com/investing/good-time-to-buy-reits/
- https://www.ig.com/en/news-and-trade-ideas/nvidia-takes-the-record-for-the-biggest-stock-market-gain-ever-240223
- https://www.zacks.com/stock/research/AAPL/stock-style-scores
- https://www.nasdaq.com/articles/amzn-cost-wmt:-which-strong-buy-retail-stock-is-most-undervalued
- https://www.investing.com/academy/trading/warren-buffett-investment-strategy-rules-fortune/