Graduation Year

2024

Date of Submission

4-2024

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Eric Hughson

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Abstract

The aim of this research study is to examine whether securitized real estate returns reflect U.S. stock market returns or direct real estate returns. Moreover, it answers the question many researchers have been tackling for years: are REITs stocks or real estate? I hypothesize that there will be a correlation between REITs, the direct real estate market, and the stock market. To test my hypothesis, I used monthly index values and returns data from Fama-French, the FTSE NAREIT U.S. Real Estate Index Series, the S&P CoreLogic Case-Shiller home price indexes, the Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity, and Green Street’s Commercial Property Price Index. The results of this study illustrate that, despite their real estate underpinnings, REITs closely mirror the behavior and return characteristics of the broader stock market, challenging conventional perspectives on their classification and investment utility.

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