11/02/2012 | by
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Uncertainty Impacts Investors in October

While Hurricane Sandy's affects may have been felt across much of the Northeast, the storm had little impact on U.S. REITs and the market at large, according to Brad Case, NAREIT's senior vice president of research and industry information.

"Even fairly large weather events typically have little impact on the overall market. The U.S. economy is very resilient and very well diversified in terms of what sources of earning companies have and in terms of geographic distribution of their activity," Case explained in a video interview with REIT.com.

In Case's analysis of the October REIT market, he said it was a "soft month" in general for investors. He attributed that to continued uncertainty about the outcome of the election. However, he added that there wasn't much of a dip for REIT investors as the broader stock market lost nearly 2 percent and REIT investors lost only one-third of a percent.

"A large part of what happened during the month was an increase in uncertainty about what's going to happen on Election Day, both in respect to the White House and with respect to the Senate and other races," he said.

The uncertainty surrounding the election coupled with the housing recovery has also affected the lodging and multifamily sectors, which have witnessed lower gains despite having some of the strongest fundamentals among REITs. Case noted that the lodging sector depends on the strength of the economic recovery for business and travel vacation. However, in the multifamily sector, he said investors are overreacting in terms of the housing market recovery.

"There's a gap of roughly 4 million housing units and it'll take years to work through that," he said.

Case also discussed the market's typical response to an upcoming election, stating that new information always move the market.

"What moves markets is new information and surprises," he said. "To the extent that there are surprises that moves the market one way or the other depends on what kind of surprises we have. Market participants have worked really hard to try and find out which party and which candidate at several levels are going to win on Election Day and what that's going to mean for public policy that affects the markets."