O
ver the past five years, U.S. housing has added about $20 trillion in value—a 57 % rise since 2020, or roughly 9.5 % per year. That pace is unsustainable. Homeowners gain equity, but buyers face high prices and a greater risk of a downturn. To hedge against that risk while earning income, consider a vehicle that delivers an 8.4 % dividend.

    For context, the 30‑year average growth of U.S. home prices is 4.8 % per year, about half the recent surge. The 2008 crash was driven by zero‑down mortgages, exotic loan products, and negative equity—none of which dominate today. Mortgage rates remain high, curbing speculative buying and keeping many homeowners locked into existing mortgages.

    This environment creates a niche for real‑estate investment trusts (REITs) and closed‑end funds (CEFs) that hold them. REITs own diverse assets—warehouses, data centers, senior‑care facilities, office buildings—and can sell high‑performing properties to lock gains, then reinvest in slower‑growing sectors. CEFs that invest in REITs often offer higher yields than ETFs.

    One such fund is the Nuveen Real Estate Income Fund (ticker JRS). It delivers an 8.4 % yield, far above the 3.8 % yield of the SPDR Dow Jones REIT Index (RWR). JRS trades at a 6.8 % discount to net asset value, meaning investors can buy its portfolio of 92 top REITs—Prologis, Equinix, Ventas, Highwoods—at roughly 93 cents on the dollar. Despite its modest $241 million asset base, JRS has outperformed the broader REIT market over the past five years, and its dividend has remained stable even amid the 2022 rate hike.

    The discount is narrowing, suggesting further price appreciation on top of the high dividend. For those whose real‑estate exposure is limited to a single home, JRS offers diversification and a hedge against a potential residential downturn. For non‑homeowners, it provides broad real‑estate exposure with a steady 8.4 % income stream.