This research note estimates the number of American households and Americans living in them that own REIT stocks directly or indirectly through mutual funds, ETFs or target date funds.
November 2022
This research note estimates the number of American households and Americans that own REIT stocks directly or indirectly through mutual funds, ETFs or target date funds. We estimate that approximately 150 million Americans, or roughly 45% of American house- holds, are invested in REIT stocks.
The key sources of data for this analysis are the 2019 Federal Reserve Board Survey of Consumer Finances (SCF), the 2019 Employment Benefit Research Institute data on 401(k) equity allocations (EBRI), Census population and household counts, Census household income statistics, Morningstar Direct data on asset weighted REIT exposures by investment product type.
Defining the Share of Households with Equity Ownership
The SCF reports that 52.6% of house- holds have equity exposures.1 The most common type of equity exposure includes ownership through a tax deferred retirement account (50.5% of households), direct stock (15.2%), direct holding of pooled investment funds (9.0%), and other managed assets (5.9%). The predominance of tax deferred retirement account based owner- ship will be used below as a key assumption.
Table 1 shows the number of households and associated number of people per household as derived from SCF and Census data.
Estimating REIT Ownership Among Equity Owners
As noted above, the dominant form of stock ownership is through a tax deferred retirement account, most typically through an employer sponsored 401(k) plan. EBRI estimates the average asset allocation in 401(k) accounts. EBRI divides equity ownership vehicles into four categories, which are treated as mutually exclusive by EBRI and for this analysis. The four categories are equity funds, target date funds, balanced funds and company stock. The shares are shown in row (1) of Table 2.
For each of these four fund types we can estimate the share of assets that have REIT exposure using Morningstar Direct data. This analysis is done on an asset-weighted basis and is shown in row (2) of Table 2.
- Generalist equity funds: 85% have some REIT exposure. For these purposes this is likely a conservative estimate because broad-based passive funds are more likely to have REIT exposure and are popular in 401(k) plans.
- Target date funds: Nearly 100% of target date funds have REIT exposure.
- Balanced funds: Assumed to be the same as generalist equity funds.
- Company stock: Assumed to be 3%. This approximates REITs’ share of equity market capitalization in the S&P 1500.
Multiplying the share of fund ownership by the share of funds with REITs by the number of households with equities and summing across fund types yields the total number of households with REITs. As shown in row (4) of Table 2, 57.6 million households (approximately 45% of households) have REITs. Finally, multiplying the number of households by the average number of people per household from Census data (2.60), yields approximately 150 million Americans in households with REIT ownership.
Ownership by State
These estimates are decomposed to the state level using the relationship between equity ownership and state household income distributions. Table 3 provides the estimates.
State ownership is estimated by deriving the share of households with stock ownership in five household income categories (<$25 thousand, $25 to $50 thousand, $50 to $75 thousand, $75 to $100 thousand, and more than $100 thousand) using Fed SCF data.
State ownership is estimated by deriving the share of households with stock ownership in five household income categories (<$25 thousand, $25 to $50 thousand, $50 to $75 thousand, $75 to $100 thousand, and more than $100 thousand) using Fed SCF data.
These ownership shares are then applied at the state level using census counts of households by income bracket. This yields an estimate of the number of households with equity ownership by state. The number of households with REIT ownership is derived by applying the same methodology used in Table 2.
[1] Federal Reserve, Survey of Consumer Finances, Federal Reserve Bulletin, September 2020.
[2] Employment Benefit Research Institute, Issue Brief No. 562, What Does Consistent Participation in 401(k) Plans Generate? Changes in 401(k) Plan Account Balances, 2010–2019, Figure 7.
FAQs
Nareit estimates that nearly 170 million Americans live in the 50% of all households that own REITs. 168 million Americans live in households that own REIT stocks. 50% of households own REITs.
How many Americans own REITs? ›
According to new research from Nareit, the association representing publicly traded real estate companies, 168 million Americans, roughly 50% of all U.S. households, have some exposure to public REITs. That ownership comes in direct stock ownership or through mutual funds, ETFs or target date funds that include REITs.
Who is the largest REIT owner? ›
Prologis, American Tower, and Welltower were the real estate investment trusts (REITs) worldwide with the largest market caps as of April 11, 2024.
How big is the REIT market in the US? ›
The FTSE Nareit All Equity REITs index is a free-float adjusted, market capitalization-weighted index of equity real estate investment trusts (REITs) in the United States. As of December 2023, the market cap of the index was 1.3 trillion U.S. dollars, up from 1.2 trillion U.S. dollars in December 2021.
Does Warren Buffett own REIT? ›
Buffet and REITs
However, Berkshire sold its holdings of STORE Capital in 2022 after the company announced it was being acquired by two outside investment funds. Since then, filings have shown that Berkshire Hathaway has not owned shares of any other REIT.
What is the 90% rule for REITs? ›
How to Qualify as a REIT? To qualify as a REIT, a company must have the bulk of its assets and income connected to real estate investment and must distribute at least 90 percent of its taxable income to shareholders annually in the form of dividends.
Why not to invest in REITs? ›
REITs are, however, sensitive to interest rates and may not be as tax-friendly as other investments. If a REIT is concentrated in a particular sector (e.g. hotels) and that sector is negatively impacted (e.g. by a pandemic), you can see amplified losses.
What is the largest private REIT in the US? ›
BREIT is by far the largest private REIT, with a net asset value of $68 billion as of Nov. 30, 2022. Its biggest rival is Starwood Real Estate Income Trust, or SREIT, with a net asset value of $14 billion as of Nov. 30, 2022.
How much does a CEO of a REIT make? ›
Based on our data, it appears that the optimal compensation range for a President & Chief Executive Officer at Real Estate Investment Trust is between $595,933 and $982,720, with an average salary of $779,357.
What are the top 5 largest REITs in the US? ›
Notable REITs
The five largest REITs in the United States in 2021 are: American Tower Corporation, Prologis, Crown Castle International, Simon Property Group and Weyerhaeuser.
At the end of 2022, U.S. public REITs owned an estimated 575,000 properties—up 8% from the previous year—and 15 million acres of timberland across the U.S. Source: S&P Capital IQ Pro.
What is the oldest REIT in the US? ›
The first REIT was the American Real Estate Investment Trust, also known as American Realty Trust, established in the U.S. in 1960. The trust followed the passage of the Real Estate Investment Trust Act of 1960, part of the Cigar Excise Tax Extension of 1960, which was signed into law by President Dwight D. Eisenhower.
Why Warren Buffett doesn t buy rental properties? ›
Warren Buffett generally buys real estate only in the form of real estate investment trusts (REITs). He sticks to stocks because he thinks they offer a more efficient way to build wealth.
How many investors are there in REIT? ›
Nareit estimates that nearly 170 million Americans live in the 50% of all households that own REITs. 168 million Americans live in households that own REIT stocks.
What percent of Americans invest in real estate? ›
Let's look at what percentage of Americans own stocks or real estate. It's not as high as you might think. According to the latest Gallup poll, only about 54% of Americans own any stocks. Meanwhile, only about 63% of Americans own real estate according to the Census Bureau.
Which country has the most REITs? ›
To qualify for a REIT, companies need to distribute 90 percent of their taxable income to shareholders. This model originated in the United States - the largest REIT market worldwide. European countries with an established market include the UK, Belgium, and France.
What percentage of income goes to REIT? ›
For each tax year, the REIT must derive: at least 75 percent of its gross income from real property-related sources; and. at least 95 percent of its gross income from real property-related sources, dividends, interest, securities, and certain mineral royalty income.
How big is the REIT industry? ›
In 2023, the market cap of all REITs, including equity, mortgage, and hybrid, reached 1.37 trillion U.S. dollars. This was a decrease from the 1.74 trillion U.S. dollars recorded in 2021 when the market peaked. REITs are companies which own and operate real estate to generate income.
