The housing market, which was the trigger point for the 2008 recession, is acting up yet again. The development is concerning given a majority of economists have begun discounting a moderate to severe recession.
What Happened: Tesla CEO Elon Musk issued a premonitory warning over the weekend regarding more pain for the housing market.
While specific segments of the commercial real estate (CRE) market such as industrial and healthcare are performing well, others like office and retail are alarming investors.
Rising interest rates are heightening those concerns. In response, investors are actively reducing their exposure to the CRE market.
Real estate was one of the worst-performing sectors in 2022, as rising interest rates and low demand pummeled both residential and commercial real estate investment trusts (REITs). The Real Estate Select Sector SPDR ETF has declined by 27.8% year to date. In comparison, the benchmark S&P 500 index is down only 19.7% in 2022.