Analysts attribute the overall observable decline for the majority of real estate stocks over the last year to soaring interest rates and the oversupply of available properties.
Corresponding data from different survey institutions showed that different sectors of real estate - from the homebuilders, and new and existing homes sellers - are struggling to make numbers enough to pull the diminishing values of real estate share prices.
Realogy dipped to more than 40 percent since a year ago, Redfin and Purplebricks dropped by 31 percent and 41 percent respectively, Vornado Realty Trust fell 10 percent and CBRE dipped to 1 percent.
Homebuilder stocks have also declined this to 35 percent.
John Kim of BMO Capital Markets told The Real Deal that the struggle is "really due to rates." It also does not help that the Federal Reserve has increased rates. Increasing rates are making investors wary about property capitalization and valuations.
Indeed, affordability has also been denting the number of people who are buying new homes with sales plummeting to the weakest pace between December 2016 and September this year, Bloomberg reported, citing data released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development in Washington.
The government data showed that sales of single-family homes decline by 5.5 percent in September even with median sales prices decreasing by 3.5 percent. Sales were particularly down 1.5 percent in the South due to the impact of Hurricane Flores across North Carolina and South Carolina in mid-September.
Separately, numbers released by the National Association of Realtors showed that sales of existing homes have also decreased in September to the weakest pace in nearly three years.
Real estate stocks are also being pulled down by oversupply. The Real Deal stated that there are more than 27.4 million square feet of properties being sold in the market. That number is expected to grow as additional 36 million square feet is expected to open before 2018 ends and another 57.4 million square feet to open in 2019.
Indeed, U.S. government data showed that a number of new houses for sale rose to 327,000 as of the end of September. This is the biggest since January 2009 when there were 318,000 properties available.
While the future is bleak for the residential property market, analysts were seeing promising movement with mergers and acquisitions sectors in the real estate. Mergers and acquisitions deals among real estate firms reached $524.7 billion in 2017. This is almost 25 percent more than the $424.5 billion attained in 20017 according to The Real Deal, citing data from Thomson Reuters. The increase was primarily driven by mergers and acquisitions in the hotel sector.
