In this article, we will discuss the 10 most undervalued real estate stocks to buy according to analysts.
Where is the US Real Estate Market Heading?
According to the National Association of Home Builders, $204 billion worth of goods were utilized in the construction of new single-family and multifamily housing in the US in 2024, out of which $14 billion were imported from outside the country. Softwood lumber and gypsum are two essentials used in new home construction and are majorly imported from Canada and Mexico. The new President has warned that he might place reciprocal tariffs on Canadian dairy and lumber that might be implemented soon. Earlier, tariffs on Canada and Mexico went into effect on March 4. Later, President Trump paused tariffs on products from Mexico and Canada covered by the USMCA free trade agreement until April 2.
Simultaneously, it is worth noting that the average rate on a 30-year mortgage has been declining since mid-January. While the average rate is at its lowest level since December 12, it is still higher relative to January 2021’s 2.65% record low. Joel Berner, senior economist at Realtor.com, stated the situation as follows:
“We do not anticipate significant relief from high mortgage rates in the near future because of inflation remaining stubbornly high, which will not be helped by the tariffs that the Trump administration appears committed to rolling out”
On the bright side, mortgage applications witnessed a weekly rise thereby indicating that the mortgage rates have fallen enough to bring some potential home buyers and current homeowners back into the market. According to the Mortgage Bankers Association’s seasonally adjusted index, total mortgage application volume climbed 20.4% for the week ending February 28 compared with the prior week.
With that being said, let’s move to the 10 most undervalued real estate stocks to buy according to analysts.
Aerial view of a real estate complex with several residential lots under construction.
Our Methodology
In order to compile a list of the 10 most undervalued real estate stocks to buy according to analysts, we first used a stock screener to screen real estate stocks that have a forward P/E lower than 15. Moving on, we shortlisted the 10 stocks with the highest average upside potential, as of March 6. The 10 most undervalued real estate stocks to buy according to analysts have been arranged in ascending order of their average upside potential. We have also added the hedge fund sentiment for each stock, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Most Undervalued Real Estate Stocks To Buy According To Analysts
10. Rithm Capital Corp. (NYSE:RITM)
Average Upside Potential: 10.64%
Forward P/E: 5.95
Number of Hedge Fund Holders: 33
Rithm Capital Corp. (NYSE:RITM) is an asset manager focused on real estate and financial services. The firm invests across a variety of real estate and financial services assets some of which include residential mortgage loans, consumer loans, residential transitional loans, and commercial real estate. Rithm has a family of operating companies including Newrez, Genesis Capital, and Sculptor.
Rithm Capital Corp. (NYSE:RITM) has grown from a manager of just mortgage servicing rights to an investment platform with an opportunistic portfolio across the real estate and financial services sectors. The firm has a distinct competitive advantage in the form of vertically integrated operating companies with capabilities in direct asset sourcing, asset optimization, and capital markets. This diversified portfolio of investments and operating companies has offered the company resilience against changing economic conditions.
Rithm Capital Corp. (NYSE:RITM) is a high-performing diversified asset manager that has delivered 76% earnings growth since Q1’21. The firm closed 2024 with robust earnings and a strong performance in each of its core businesses. The firm recorded earnings available for distribution per diluted common share of $2.10 in fiscal year 2024, demonstrating a 27% year-over-year growth. Overall, the diversified portfolio, robust asset-generating franchises, and strong earnings deem Rithm Capital Corp. (NYSE:RITM) a potential investment opportunity.
9. Franklin BSP Realty Trust, Inc. (NYSE:FBRT)
Average Upside Potential: 13.66%
Forward P/E: 9.44
Number of Hedge Fund Holders: 9
Franklin BSP Realty Trust, Inc. (NYSE:FBRT) originates, acquires, and manages a diversified portfolio of commercial real estate debt primarily first mortgage loans. The REIT’s portfolio of debt investments is generally secured by real estate located within and outside the US. Additionally, the firm invests in subordinate loans, mezzanine loans, and securities. As of December 31, 2024, FBRT had approximately $6 billion of assets.
Franklin BSP Realty Trust, Inc. (NYSE:FBRT) maintains a diversified portfolio that is capable of generating attractive risk-adjusted returns and a stable income. One of the strengths of the real estate investment trust is that the process is handled internally including the origination, underwriting, and asset management. In addition to extensive origination, underwriting, and asset management capabilities, the REIT boasts a strong network of broker and borrower relationships which leads to proprietary deal flow and an extensive pipeline of investment opportunities.
On March 10, the company announced the planned acquisition of a privately held commercial real estate finance company, NewPoint Holdings JV LLC. While the acquisition has been planned for the third quarter of 2025, it marks a transformative transaction for the firm as the combined operations offer an opportunity for earnings growth as well as broaden the firm’s multifamily operations to include agency and mortgage servicing alongside its existing commercial real estate lending products.
