I'll put it to you plainly: REITs are overpriced. Many investors have bought into a broad recovery in this sector, but I am afraid prices have gotten ahead of themselves. Yes, I am aware that REITs, as measured by SNL's index, fell 15% in the third quarter. Still, I believe most are richly priced. The problem, of course, is fading economic growth, and it's a bit of a vicious cycle. The weak economy and uncertainty at home is causing violent stock market gyrations. Things are even worse in Europe. This is gnawing away at banks' health and well-being, and they are reluctant to step up and make loans. Economic expansions that fill space in the real estate market require financing. With lenders under pressure and whining about woes, it's hard to imagine a speedy restart to the recovery.
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