The real estate market has been hit by a lot of bad news in the first three months of this year, and it looks like it will only get worse in the coming months. Mortgage rates have remained elevated and are a pain for buyers. The Federal Reserve holding higher for longer with very slowly moderating inflation is not going to solve that problem anytime soon.
Lawrence Yun, chief economist at NAR, noted that consumers are gradually adapting to a new normal of mortgage rates between 6% and 7%.
There’s a lot of uncertainty about where this market could go. Prices are still high, and the Trump administration may still force the Fed to push rates lower. On the other hand, the trade wars combined with an AI slowdown could knock the entire market down, and the real estate market could fall significantly in such a scenario.
Some real estate stocks have already started falling, and there’s a good chance that some of them are already below their intrinsic value.
Aerial view of a city skyline with a modern real estate development in focus.
Methodology
For this article, I screened the worst-performing real estate stocks year-to-date.
I will also mention the number of hedge fund investors in these stocks. 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).
15. Stratus Properties Inc (NASDAQ:STRS)
Number of Hedge Fund Holders In Q4 2024: 1
Stratus Properties Inc (NASDAQ:STRS) is a real estate company that primarily operates in Austin, Texas, and select Texas markets.
The stock is down significantly so far in 2025 as StockNews.com downgraded Stratus Properties from “Hold” to “Sell.” They cited its valuation and financial performance.
The company doesn’t have the best financials, either. It reported a net loss of $0.4 million in Q3 2024 and $1.7 million in Q2 2024. There has been some improvement compared to prior-year losses, but the company is still making losses.
Stratus has been heavily reliant on debt refinancing to manage its projects. For instance, the company recently refinanced loans for properties like Lantana Place and Kingwood Place but remains exposed to high debt-to-equity ratios and rising interest rates.
STRS stock is down 7.71% year-to-date.
14. FRP Holdings Inc (NASDAQ:FRPH)
Number of Hedge Fund Holders In Q4 2024: 9
FRP Holdings Inc (NASDAQ:FRPH) is a real estate holding and development company.
The stock is down significantly so far in 2025 due to a key tenant occupying 50,000 square feet of industrial space (10% of its Industrial and Commercial segment) defaulted on its lease obligations.
This caused an 11% revenue decline and a 15% drop in net operating income (NOI) for the segment in Q4 2024.
The company also reported Q4 2024 net income of $1.68 million or $0.09 per share, down from $2.88 million or $0.15 per share in Q4 2023.
The company anticipates a significant drop in occupancy at its Cranberry Park property due to tenant exits. This will require time to stabilize through re-leasing efforts. Moreover, FRP is investing approximately $71 million in equity capital for industrial and multifamily developments in 2025, which is expected to temporarily detract from NOI until projects stabilize.
FRPH stock is down 7.97% year-to-date.