For generations, property ownership has been an essential element of the American Dream, white picket fence coming part and parcel with the nuclear family. But with the slew of foreclosures and upside-down mortgages these past couple of years, owning a home has come to look more like a nightmare. Nor has the commercial real estate arena fared any better: of the numerous loans issued at the apex of the real estate bubble, over half are now underwater.

So it's small wonder that the troubled sector has yet to bounce back from its 2008 nosedive. But could the market finally be ready for a turnaround?

According to industry analysts, rentals are approaching the point of saturation -- and when it does, they expect homebuying to bounce back. As "echo-boomers" reach prime renting age, industry experts expect to see another 5 million rental households flood the market. The problem is, there just isn't enough rental inventory to meet these needs.

It seems that some renters may have already gotten the memo: Despite increasing rates, mortgage applications were on the rise last week. And the Mortgage Bankers Assocation's purchase index hasn't been this high since the home buyer tax credit expired.

What's more, commercial businesses are starting to show signs of renewed life. According to the Emerging Trends in Real Estate 2011 report, while apartments were still the most attractive investment option among all property types, industrial, hotels, office and retail followed closely behind. 

But is it too soon to identify a true upward trend? According to Fannie Mae's National Housing Survey, Americans are more anxious about buying now than they were earlier this year. And most still don't think the market has hit bottom. Commercial real estate investments remain equally uncertain. Respondents to the Emerging Trends report cited job creation as the most important factor in determining the sector's health -- so a downturn in this department could have dramatic effects.

Real estate is certainly overdue for a comeback, but are the optimists jumping the gun? Before you put your money on the line, you may want to see what the experts have to say. (Click here to access free, interactive tools to analyze these ideas.)

Here's a list of six Real Estate Investment Trusts (REITs) that have seen improving analyst sentiment over the past three months. Analyst ratings are presented on a linear scale, where 1 = "Strong Buy" and 5 = "Strong Sell." All of the names below have seen their ratings move closer to 1 over the last three months, i.e., improving analyst sentiment.

Analyst ratings sourced from Reuters. The list has been sorted by change in rating over the past three months.

Company

Industry

Rating Change Over the Past 3 Months

Cousins Properties (NYSE: CUZ)

Diversified REIT

Rating has changed from 2.4 to 1.4

Government Properties Income Trust (NYSE: GOV)

Office REIT

Rating has changed from 3 to 2.33

Senior Housing Properties Trust (NYSE: SNH)

Residential REIT

Rating has changed from 2.78 to 2.22

Developers Diversified Realty (NYSE: DDR)

Retail REIT

Rating has changed from 3 to 2.4

Kilroy Realty (NYSE: KRC)

Office REIT

Rating has changed from 2.5 to 2

Weingarten Realty Investors (NYSE: WRI)

Retail REIT

Rating has changed from 2.46 to 2.08

Interactive Chart: Press Play to see how the market caps have changed for all the stocks mentioned above.


 

Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.

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