3 Real Estate Stocks to Track as the Market Tumbles

Different real estate stocks will slide (if they fall) differently as the market turns ugly, and tracking them to find the perfect opportunity to buy can be a smart move.

| More on:
Business people standing near houses models

Image source: Getty Images

The real estate sector in Canada is going through a rough phase right now. From a slowdown in buying activity to massive price drops expected in the coming months, there are quite a few triggers ready to topple the real estate market in Canada.

And its impact will not remain isolated to the real estate assets. Associated businesses like residential REITs, real estate service companies, and other real estate businesses might also feel burnt.

However, not all these businesses will suffer the same way or even at the same time. And if you plan on buying real estate stocks at discounted prices, keeping an eye on different types of real estate stocks might help you buy them at the perfect discounted price.

A residential REIT

Interrent REIT (TSX:IIP.UN), with its focus on multi-family properties, is one of the few residential REITs in Canada, especially of this size. And it’s currently quite heavily discounted. The stock’s decline started way before the regulators in Canada began to take harsh measures to counteract the negative impact of inflation and reining in the rampaging housing market.

The stock has fallen over 35%, and the dividend yield has only jumped to about 2.85%. However, the discount is still worth buying, as the company is also quite heavily undervalued, and its capital-appreciation potential in a healthy bull market is quite decent. We have yet to see how far it falls along with the rest of the real estate market, but chances are that it has gone through the worst phase already.

A property management and essential services company

FirstService (TSX:FSV)(NASDAQ:FSV) is a giant in the property management industry. It has one of the largest portfolios of properties under management in North America and is also considered a leader in the virtual services space. The stock has mostly gone up since its inception, and the pace was only expedited after the pandemic.

The rapid post-pandemic growth triggered a correction, and so the stock, despite its residential focus, has been falling way before the current pressure on the market segment. In fact, it has started a slow journey towards recovery, which is a different pattern than most of the real estate sector is experiencing right now.

FirstService is also a generous Dividend Aristocrat and grower, but it’s the capital-appreciation potential of the company that attracts most investors. And if you can buy it at an even steeper discount than the one it’s currently offering, the return potential might be proportionally phenomenal.

A commercial real estate services company

If you are looking to track perhaps the least impact of the current real estate headwinds in Canada, Colliers International Group (TSX:CIGI)(NASDAQ:CIGI) might be an interesting stock to track.

Not only does it focus primarily on commercial properties instead of the more distressed residential sector in Canada, but it also has an international reach, even though the bulk of the income/revenue comes from its domestic and U.S. operations.

Colliers also cast a wider service net. And even though it is discounted (about 25%), it seems more like the inevitable correction that came after a powerful growth phase post-pandemic rather than the market reacting to negative housing catalysts. The stock may fall further, giving you a chance to grab this powerful grower at a better discount.

Foolish takeaway

From tangible assets to stocks and funds, real estate investing in Canada can be considered a dynamic and, currently, a slightly risky endeavour right now. The momentum that propped up the market too high still hasn’t fully waned yet. And it’s too soon to see how long the real estate market will take to make a full recovery.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends COLLIERS INTERNATIONAL GROUP INC and FirstService Corporation, SV.

More on Dividend Stocks

stock research, analyze data
Dividend Stocks

3 Oversold Dividend Stocks (With a 7% Yield) I’d Buy Right Now

TSX dividend stocks such as Enbridge and TC Energy offer investors dividend yields of more than 7% in 2023.

Read more »

Dividend Stocks

Is it Time to Buy More of Royal Bank of Canada Stock?

With bank stocks down after the fall of three U.S. banks, it might be time to load up on Royal…

Read more »

growing plant shoots on stacked coins
Dividend Stocks

Passive Income Portfolio: 4 Dividend Stocks to Get Started

These dividend stocks offer some of the best and most stable passive income out there if you want to get…

Read more »

Dividend Stocks

TFSA Investors: 3 Oversold Stocks That Should Be On Your Radar Right Now

Consider these three oversold stocks if you want undervalued stocks for your self-directed TFSA portfolio.

Read more »

A tractor harvests lentils.
Dividend Stocks

This Dividend Stock Might Be the Best Buy You Make in 2023

A dividend stock just increased its dividend by 12%, and remains a solid long-term buy trading in value territory right…

Read more »

woman data analyze
Dividend Stocks

Better Buy: BCE Stock vs. Telus

What TELUS stock lacks in yield, it makes up for in better capital gains potential over BCE stock.

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Dividend Stocks

Turn $10,000 Into $160K in 17 Years Buying 226 Shares in This Stock

Forget about cheap stocks and instead look for stability, which is what you'll get with this company providing strong growth…

Read more »

Increasing yield
Dividend Stocks

Want Passive Income in 2023? Buy These High-Yield Dividend Stocks

Yield is one of the most important factors to consider if your aim is to maximize your passive-income return on…

Read more »