A wave of buying drove up the Dow Jones Real Estate index on Friday. Previously, interest rates supported the REIT valuations, but that is no longer the case as interest rates have increased. The yield on 10-year Treasury bonds closed at 4.26%, and the dividend yield on the Dow Jones REIT ETF components is at 5.27%. The historical average difference, according to Merrill Lynch, between the two figures is 1.75%, making the fair value of the Dow Jones REIT ETF about 12.3% less than its current close.

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