Been doing some research on whether REITs are actually a good investment right now, especially with all the recession talk. Turns out there's some interesting data here that most people overlook.

So here's the thing about REITs - they've got a solid long-term track record. From 1972 to 2024, they averaged 12.6% annual returns compared to 8% for the S&P 500. Not bad. But lately? Yeah, they've been lagging. Last five years they only did 5.5% annually while the S&P 500 was crushing it at 15.3%. Makes you wonder if they're worth it.

But the recession angle is where it gets interesting. When recessions hit, REITs definitely take a beating - averaging around -17.6% during downturns. The S&P 500 actually did worse though, dropping over 20% on average. Here's what surprised me: in the 12 months before recessions, REITs still managed positive returns at 5.7%. And then after the recession ends? That's when they really shine.

After the last six recessions, REITs averaged 22.7% returns in the following 12 months. That's a massive rebound. The reason is pretty straightforward - when central banks cut rates during recessions, real estate values shoot up because cap rates drop. Since REITs trade publicly, prices adjust quickly, sometimes even before the actual recovery hits. Markets price in what they think things will be worth 12-18 months out.

Now here's the nuance that matters: not all REITs are created equal. Data centers, healthcare REITs, and triple net leases tend to hold up way better during downturns. Meanwhile, hotel REITs and billboard companies? They get hammered. Office space too - that sector's been struggling anyway.

So are REITs a good investment now? If you're thinking about recession resilience specifically, they don't fall as hard as the broader market. Healthcare and data center REITs offer real protection. And if a recession does hit, they tend to rebound fastest - which means the worst time might actually be the best buying opportunity. Just pick the right subsectors.