It would seem a good time for real estate investment trusts (REITs). The economy continues to recover, wage growth is happening and the biggest problem with the housing market seems to be the lack of available housing.
The worst appears to be over for the broader economy. And even recent challenges like the demise of retail anchor stores in shopping malls are already transitioning to new opportunities and grocery stores and other high-traffic retail see the transition as an opportunity.
But there are some troubling signs with this recovery. Real estate is a cyclical market, with fairly predictable ups and downs. The challenge this time around is the “up” cycle is looking like it’s about to peak after a respectable nine-year run.
According to industry group REIT.com, however, commercial construction is in line with levels 20 years ago, yet the economy is more than 60% larger than it was back then.
That isn’t an encouraging sign. What’s more, Washington’s inability to set any economic trajectory means there’s as much risk as reward right now in REITs. You can’t blindly buy. Following are seven high-yield REITs that will break your portfolio if you are blinded simply by a juicy yield.