On one hand, note that holding REITs is pretty different than "buying property and sitting on it"; these companies charge rents to real businesses & apartment-dwellers. They will (on average) generate and distribute profits from that activity even if the underlying property value remains completely flat. I'm not sure how that's different from "investing in the real economy" -- the apartment-dwellers or office-dwellers are happy to hand some profits over to the landlords in exchange for being able to be in a place with access to good jobs/culture/etc, and for the flexibility of not being locked down to that property.
On the flip side, there is a "financial economy" side to it too. They're leveraged (as is an individual mortgaged homeowner). If property values do go up, and if interest rates do fall, then yeah, the REITs are going to be extra juiced -- this has happened over the time period you highlighted.
But not without risk, too. In 2007-2009, the maximum drawdown (peak to trough) in VNQ was -73%; that's a lot worse than the -55% for VTI.
On the flip side, there is a "financial economy" side to it too. They're leveraged (as is an individual mortgaged homeowner). If property values do go up, and if interest rates do fall, then yeah, the REITs are going to be extra juiced -- this has happened over the time period you highlighted.
But not without risk, too. In 2007-2009, the maximum drawdown (peak to trough) in VNQ was -73%; that's a lot worse than the -55% for VTI.