T
he real estate market has seen significant changes following the Fed's rate cut, making homebuying more affordable for the first time since 2020. According to Redfin, buyers need to earn $115,000 to afford the typical home, a decrease from previous years. However, Senior Economist Elijah de la Campa believes this is not a long-term trend, as the market won't be cheaper in the near future due to the Fed's rate cut plans already being priced into mortgage rates.

    The housing payments have also seen a decline of almost $300 from April's all-time high, with the median housing payment decreasing by 2.7% year-over-year. Despite this, the housing market remains unaffordable for many, but it is as good as it gets according to Orphe Divounguy, Zillow's senior economist.

    Robert Reffkin, Compass founder and CEO, notes that homebuyers are more active now than before, reacting more to changes in mortgage rates rather than the absolute rate itself. The lock-in effect has been a major issue, with 75% of homeowners locked into 4% mortgage rates or below, but this is expected to drop as declining mortgage rates make refinancing more attractive.

    Mortgage applications have surged, hitting their highest levels since July 2022 as rates dropped. According to the Mortgage Bankers Association, applications to refinance or purchase a home increased by 11% week-over-week, with refinancing applications climbing 20%. This marks the second consecutive week of double-digit gains in applications.

    Now that we've analyzed the market's response to the Fed rate cut, let's move on to the 13 most profitable real estate stocks now. Our methodology involves creating an initial list of 30 companies with the biggest market caps and screening out those with a positive net income over the past 12 months and 5-year growth.

    Here are the top 13 most profitable real estate stocks:

    1. Realty Income Corporation (NYSE:O) - Number of Hedge Fund Holders: 195, Year Net Income Growth: 16.67%

    Realty Income Corporation is one of the largest REITs with a growing international presence, owning or holding interests in 15,450 properties across the US and Europe.

    2. Extra Space Storage Inc. (NYSE:EXR) - Number of Hedge Fund Holders: 255, Year Net Income Growth: 13.24%

    Extra Space Storage is the largest operator of self-storage properties in the US, with a geographically diverse portfolio and strong occupancy levels.

    3. Welltower Inc. (NYSE:WELL) - Number of Hedge Fund Holders: 245, Year Net Income Growth: 12.34%

    Welltower is a healthcare real estate investment trust that owns or leases over 1,300 properties across the US, Canada, and the UK.

    4. Ventas Inc. (NYSE:VTR) - Number of Hedge Fund Holders: 184, Year Net Income Growth: 11.42%

    Ventas is a healthcare real estate investment trust that owns or leases over 2,500 properties across the US, Canada, and the UK.

    5. Simon Property Group Inc. (NYSE:SPG) - Number of Hedge Fund Holders: 193, Year Net Income Growth: 10.56%

    Simon Property Group is one of the largest shopping mall operators in the world, with a portfolio of over 200 properties across the US, Europe, and Asia.

    6. Realty Income's rival, National Retail Properties Inc. (NYSE:NNN) - Number of Hedge Fund Holders: 194, Year Net Income Growth: 9.85%

    National Retail Properties is a real estate investment trust that owns or leases over 3,400 properties across the US.

    7. AGNC Investment Corp. (NASDAQ:AGNC) - Number of Hedge Fund Holders: 204, Year Net Income Growth: 8.93%

    AGNC Investment Corp is a mortgage REIT that invests in agency residential mortgage-backed securities and other mortgage-related assets.

    8. Annaly Capital Management Inc. (NYSE:NLY) - Number of Hedge Fund Holders: 194, Year Net Income Growth: 7.92%

    Annaly Capital Management is a mortgage REIT that invests in agency residential mortgage-backed securities and other mortgage-related assets.

    9. New York Mortgage Trust Inc. (NASDAQ:NYMT) - Number of Hedge Fund Holders: 184, Year Net Income Growth: 6.94%

    New York Mortgage Trust is a mortgage REIT that invests in agency residential mortgage-backed securities and other mortgage-related assets.

    10. Arbor Realty Trust Inc. (NYSE:ABR) - Number of Hedge Fund Holders: 173, Year Net Income Growth: 5.96%

    Arbor Realty Trust is a real estate investment trust that originates, acquires, and manages multifamily and commercial mortgages.

    11. Colony Capital Inc. (NYSE:CLNY) - Number of Hedge Fund Holders: 164, Year Net Income Growth: 4.98%

    Colony Capital is a global real estate investment firm that invests in various asset classes, including residential and commercial properties.

    12. CoreCivic Inc. (NYSE:CXW) - Number of Hedge Fund Holders: 154, Year Net Income Growth: 4.49%

    CoreCivic is a private corrections company that operates correctional facilities across the US.

    13. Ventas Realty Limited Partnership (NYSE:VTR) - Number of Hedge Fund Holders: 144, Year Net Income Growth: 3.99%

    Ventas Realty Limited Partnership is a real estate investment trust that owns or leases over 2,500 properties across the US, Canada, and the UK.

    These companies have demonstrated strong financial performance and growth potential in the real estate market, making them attractive investments for those looking to capitalize on the current trends.