For the love of real estate

Investors should buy shares like they buy groceries and REA’s share price decline has seen it become even more attractive to us. With its ranking, in the initial stock screening and ranking step of our investment process, jumping from No.#73 to No.#4 in the last week, it’s worth considering the company’s merits. Many market participants will sell shares in REA and some might even short the stock amid the expectation that its earnings will come under pressure in a property market that matures or declines. When demand for property cools however the competition to sell one’s house becomes more intense and properties need to be advertised and are often listed, for longer periods before being sold. In fact as Chart 1. illustrates, the average numbers of days a property was listed has been trending down for some years. (VIEW LINK)