May 30, 2024

In this holiday-shortened week, more data will show just how hot the residential real estate market is. The S&P Corelogic Case-Shiller home price index for December comes out on Tuesday and January new home sales will be released on Thursday.

The ever-rising home prices, though, aren’t helping residential real estate brokerages as real estate agents compete for a dwindling supply of homes for sale. In addition, mortgage rates are creeping up, making a home purchase less affordable, especially for first-time buyers.

Where are the opportunities in real estate? Look to commercial real estate firms and related companies. Screening a list of 14 real estate-related companies, commercial real estate services firms Newmark Group (NASDAQ:NMRK), CBRE (NYSE:CBRE), and Jones Lang LaSalle (NYSE:JLL) rank the highest by Seeking Alpha’s Quant rating.

Don’t count residential out completely. Realogy (NYSE:RLGY), which owns the Century 21, Coldwell Banker, and Better Homes and Gardens Real Estate brands, puts in a respectable fourth-place showing on the list.

That’s followed by commercial real estate services firm Cushman & Wakefield (NYSE:CWK) at No. 5.

Wall Street analysts come up with a different ranking, putting Walker & Dunlop (NYSE:WD), which arranges and finances real estate deals, at the top, followed by residential brokerage firm eXp World Holdings (NASDAQ:EXPI) at second, and Jones Lang LaSalle (JLL) at third.

Note that Opendoor Technologies (NASDAQ:OPEN) gets a Strong Sell by the Quant rating, while the average Wall Street analyst rating stands at Buy. Redfin (NASDAQ:RDFN) also screens poorly by Quant rating and gets a Neutral rating by Street analysts.

In the past year, commercial real estate-related stocks have been outperforming the residential real estate brokerage stocks. In this graph, Newmark (NMRK), Jones Lang Lasalle (JLL), and CBRE (CBRE) all outperformed the S&P 500 index, while Re/Max (NYSE:RMAX) and Realogy (RLGY) lagged the broader indes.

Earlier in February, Redfin’s forecast sees home price growth slowing from a double-digit rates since the summer of 2020 to an annual rate of 7% this year.