Summary

• U.S. equity markets finished broadly lower Tuesday on another session of wild intra-day market swings as investors await the Federal Reserve policy meeting on Wednesday and a busy slate of earnings.
• Echoing the price action on Monday, the S&P 500 rallied back from steep early-session declines and briefly turned positive before ending the session lower by 1.2%.
• Real estate equities were among the outperformers today as the Equity REIT Index finished lower by 0.3% with 7-of-19 property sectors in positive territory while Mortgage REITs rallied 1.5%.
• Robust growth in household formations - combined with the lingering housing shortage - has kept the "pedal to the metal" for home price appreciation as Case Shiller National Home Price Index data last month showed that home values soared 18.8% year-over-year in November.
• Equity Lifestyle (ELS) was among the leaders today after kicking off REIT earnings season with a solid report which included a 13.1% dividend hike to $1.64/share. ELS ended 2021 with FFO growth of 16.6% and set its initial guidance for 2022 for another 6.3% FFO growth.

Income Builder Daily Recap

We recently launched Hoya Capital Income Builder - a premier income-focused investment research service through Seeking Alpha Marketplace - that will be the new exclusive home of all of Hoya Capital's investment research. Income Builder focuses on real income-producing asset classes that offer the opportunity for diversification, monthly income, capital appreciation, and inflation hedging. If you're not already on board, give us a try with a completely risk-free two-week trial and take a look around.

U.S. equity markets finished broadly lower Tuesday on another session of wild intra-day market swings as investors await the Federal Reserve policy meeting on Wednesday and a busy slate of earnings reports in the days ahead. Echoing the price action on Monday, the S&P 500 rallied back from steep early-session declines and briefly turned positive before ending the session lower by 1.2%. Real estate equities were among the outperformers today as the Equity REIT Index finished lower by 0.3% with 7-of-19 property sectors in positive territory while the Mortgage REIT Index finished higher by 1.5%.

Volatility levels climbed to the highest since just before the 2020 Presidential Election with the VIX Index closing the session above 30 as the combination of mounting geopolitical tensions on the Russia/Ukraine border and uncertainty over how aggressive the Federal Reserve will be in combating inflation have roiled markets. Nine of the eleven GICS equity sectors finished lower today, dragged on the downside by the Technology (XLK) and Communications (XLC) sectors. The 10-Year Treasury Yield gained 5 basis points to close at 1.78%, snapping a five-day streak of declining yields.

Robust growth in household formations - combined with the lingering housing shortage - has kept the "pedal to the metal" for home price appreciation as Case Shiller National Home Price Index data last month showed that home values soared 18.8% year-over-year in November. Price appreciation has begun to show signs of moderating as mortgage rates have risen and following the "catch-up" period for home values relative to incomes, we expect the rapid surge in home prices to cool back to levels that generally match the growth of Personal Incomes, which were 7.4% above November 2020 levels and 11.6% above November 2019 levels according to data last month.

Equity REIT Daily Recap

Today we published REIT Earnings Preview: Dividend Hikes And 2022 Outlook. Real estate earnings season kicks off this week, and REITs enter fourth-quarter earnings season at an interesting crossroads, having been the best-performing asset class of 2021, but also one of the weakest through the first three weeks of 2022. REIT property-level fundamentals remain on an upward trajectory and we expect another strong quarter from residential REITs, in particular, as recent data indicates that rents continue to soar by double-digit rates. We'll from office REITs Boston Properties (BXP) and SL Green (SLG) as well as industrial REIT Duke Realty (DRE) and cell tower REIT Crown Castle (CCI) over the next 24 hours.

Manufactured Housing: Equity Lifestyle (ELS) was among the leaders today after kicking off REIT earnings season with a solid report which included a 13.1% dividend hike to $1.64/share. ELS ended 2021 with FFO growth of 16.6% and set its initial guidance for 2022 for another 6.3% FFO growth at the midpoint of the range. Same-store NOI grew 8.8% in full-year 2021 – a record for the company - and ELS expects 5.9% growth at the midpoint for 2022. As we’ve discussed in Don't Mess With The Best, the RV and Marina business lines (+12.9% revenue growth in 2021) continue to outperform the relatively strong-but-steady manufactured housing business (+8.3% growth).

Economic Data This Week

We have another frenetic week of economic data, earnings reports, and Fed-related newsflow in the week ahead, which kicked off today with the Case Shiller Home Price Index. On Wednesday, we'll see New Home Sales which is expected to show an acceleration in December. Later on Wednesday, we'll hear from the Federal Reserve at the conclusion of their two-day FOMC Meeting. On Thursday, we'll get our first look at fourth-quarter GDP data as well as Pending Home Sales for December. On Friday, we'll see inflation data via the PCE Index as well as Personal Income & Spending data.

We're excited to announce the launch of our new investment research service here on Seeking Alpha - Hoya Capital Income Builder. We've put together a great team of contributors from across the REIT, dividend, and ETF industry, so whether your focus is High Yield or Dividend Growth, we’ve got you covered with high-quality, actionable investment research and a comprehensive suite of tools and models to help build sustainable portfolio income targeting premium dividend yields of up to 10%. And of course, subscribers receive complete access to our investment research - including reports that are never published elsewhere - from Hoya Capital and our team of contributors.

Disclosure: Hoya Capital Real Estate advises two Exchange-Traded Funds listed on the NYSE. In addition to any long positions listed below, Hoya Capital is long all components in the Hoya Capital Housing 100 Index and in the Hoya Capital High Dividend Yield Index. Index definitions and a complete list of holdings are available on our website.

Additional Disclosure: It is not possible to invest directly in an index. Index performance cited in this commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Data quoted represents past performance, which is no guarantee of future results. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy.