“Davidson” On Housing

Davidson and I have what I think is our only quasi-disagreement when it comes the RE.  Rather than go through it again, please refer to this previous link.

It is a brief discussion on the topic……

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The markets have largely recovered since the March selloff, but most would agree we're not out of the woods yet. The COVID-19 pandemic isn't close to being over, so it seems that volatility is here to stay, at least until the pandemic becomes less severe. Q2 2020 hedge fund letters, conferences and more At the Read More


“Davidson” submits

Lending for new single family units has been well below historical levels. Dodd-Frank has made it difficult for potential new homeowners who would have qualified in past recoveries to get mtgs this recovery period. Yet, housing was still demanded which resulted in a much higher level of apt building. Apt building spiked to ~75% of single family levels in June 2015 and have since come lower but remain historically high.

My guess is we have already seen substantial price rises in housing due in part lack of supply and foreign influx of capital as reflected in strong US$. I do not see much change in the current slower pace of single family starts and continue to avoid this space as well as banks who I do not expect to see an acceleration of mtg lending that traditionally was associated with recoveries.

Real estate in general has been over valued with historical cash on cash returns of 7%-8% now down to 3.5%. Real estate will continue to hold its own even though over valued till the next economic correction.

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Todd Sullivan is a Massachusetts-based value investor and a General Partner in Rand Strategic Partners. He looks for investments he believes are selling for a discount to their intrinsic value given their current situation and future prospects. He holds them until that value is realized or the fundamentals change in a way that no longer support his thesis. His blog features his various ideas and commentary and he updates readers on their progress in a timely fashion. His commentary has been seen in the online versions of the Wall St. Journal, New York Times, CNN Money, Business Week, Crain’s NY, Kiplingers and other publications. He has also appeared on Fox Business News & Fox News and is a RealMoney.com contributor. His commentary on Starbucks during 2008 was recently quoted by its Founder Howard Schultz in his recent book “Onward”. In 2011 he was asked to present an investment idea at Bill Ackman’s “Harbor Investment Conference”.