I for one am out of REITs for now. I've put some cash into Preferreds (eg Royal Bank of Scotland) which is yielding 7%. That money is in my IRA so I don't care about tax issues. I've also bought some closed-end muni funds for taxable accounts. I just don't like the look of the stock price trends on REITs. I like MAA, and used to own it. I just don't feel like a recovery is in store soon for wage-earners who are MAA tenants and occupancy will continue to be a problem. I am thinking about holding Public Storage, however. Got to store that stuff when you've moved back in with mom!
Please note that the balance sheets of most REIT's are stronger than ever. Sure, low interest rates have made single-family homes more afforanle. But REIT's have also been taking advantage of these lower rates, and re-financing accordingly. This is a major positive in the long haul.
I treat my REIT holdings like pseudo bonds. Like bondholders who invest for interest income, I buy REIT's for the dividend income. So, normal stock volatility does not bother me. I would sell ONLY if something happened that jeopardized the dividend.
Could I have made more money over the years trading REIT's. Probably. But I am not a good market timer. Few people are. Again, as long as the company pays me the dividend that attracted me in the first place, then I am a happy camper. In fact, all of my REIT's have increased their dividends since I bought them.
Did you read the fairly recent Barron's cover story on demographics and the outlook for apartments? That convinced me that the intermediate and long-term view is strong, and residential real estate is a core holding...and, so why not enjoy the almost 10% yield in the meantime? And the assets here are worth $26-29 a share. Hey, the slowdown is good for the industry. Will bring supply and demand in balance. If we were in boom economy, with overbuilding pressures, that would worry me more.