The residential real estate market did not benefit much from the record low interest rates as home sales and prices continue to decline. The commercial real estate and exchange traded funds, though, have done well this year all thanks to the improved credit market. This has led exchange traded funds to come up with a game plan that heavily relies on the real estate market.

The weak labor market has continually dragged the housing side of the real estate market – but this has not greatly affected commercial real estate values, which in fact has started to stabilize. Even the insignificant increases in consumer spending and consumer sentiment were not enough to weigh down commercial real estate values.

Reports have shown that rental prices are no longer going downhill. Even vacancy rate for retail malls, office buildings, and even apartment buildings remain low. Some say this can be attributed to the improved credit markets.

The improvement in the credit market has allowed many real estate investment trusts to issue equity and even refinance their debts. Doing these has allowed REITs to pay off their debts earlier or purchase additional properties at the current low prices. It is predicted that commercial real estate prices are likely to tread an uphill journey.

Further quantitative easing, which will be known as QE2, is being seen as an expansion of the record stimulus by the Federal Reserve. QE2 calls for a $600 billion purchase of long-term Treasuries and for keeping interest rates at a historical low. QE2 is also seen as a means of attracting foreign investors as it will likely result to a depreciation of US dollar against foreign currencies.

Because of the positivity surrounding the commercial real estate market, ETFs are planning to play the particular sector. They are also looking at exposing themselves to real estate investment trusts that are seeing increased liquidity and shored up balance sheets. Some of those being eyed by ETFs are Boston Properties, Equity Residential, Simon Property Group, and Vornado Realty Trust.