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Residential Housing Companies


merkhet
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If the domestic (U.S.) economic growth continues for a few years, housing might come back in a pretty big way -- once people are able to save up for down payments, etc.

 

Anyone have domestic homebuilders or residential housing related stocks that they particularly like?

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once people are able to save up for down payments

 

The real estate market got really hot when people didn't have to do this.  ;)

 

On the origination side, credit is getting tighter because nobody with a brain wants to make subprime loans (QM rules, reps and warranties, dramatic increases in the cost of servicing delinquent loans, etc.).

 

On the inventory side, foreclosures are finally working their way through the system.

 

---

 

Here's my opinion of the management of homebuilding stocks:

 

The best  - NVR

 

Above average - TOL, LEN (especially the B shares)

 

Average - Pulte

 

Below average - KBH, AV Homes

 

Bad - HOV

 

Really bad - CHCI

 

A year or two ago, it was easy to figure out the quality of the companies by simply looking at the return on assets.

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No, but you might want check Bill Miller's portfolio. He is betting big on housing.

 

Is Bill Miller still around and running money?

 

once people are able to save up for down payments

 

The real estate market got really hot when people didn't have to do this.  ;)

 

On the origination side, credit is getting tighter because nobody with a brain wants to make subprime loans (QM rules, reps and warranties, dramatic increases in the cost of servicing delinquent loans, etc.).

 

On the inventory side, foreclosures are finally working their way through the system.

 

---

 

Here's my opinion of the management of homebuilding stocks:

 

The best  - NVR

 

Above average - TOL, LEN (especially the B shares)

 

Average - Pulte

 

Below average - KBH, AV Homes

 

Bad - HOV

 

Really bad - CHCI

 

A year or two ago, it was easy to figure out the quality of the companies by simply looking at the return on assets.

 

Thanks for the list. I'll take a look. I previously looked at Brookfield Residential Properties, but its been a while -- I suspect they're probably above average.

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Is Bill Miller still around and running money?

 

Over the last three years, though, Mr. Miller's Legg Mason Opportunity Trust has outperformed 97% of the mutual funds in its category, according to research firm Morningstar Inc. It was No. 1 in 2012 and second-best in 2013. Its total return of 67% last year trounced the S&P 500 stock index's 32% jump.
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I would look into Tricon Capital (TCN.TO). Traded in Canada but almost all of its business is US residential real estate. They bought single family houses for renting, master planned communities, empty lots, and they also have a management business, running 3rd party capital in the above strategies.

 

 

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Aren't you guys about four years too late? Shoulda bought HD in 2009-2010, no? http://finance.yahoo.com/echarts?s=HD+Basic+Tech.+Analysis&t=10y

 

Is this thread just "I missed the run up of great housing stocks, so I want to buy crappy homebuilders instead"?  8)

 

Serious question. I am not trolling :)

 

Not necessarily. See http://research.stlouisfed.org/fred2/graph/?s%5B1%5D%5Bid%5D=HOUST

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I still think that you are about 4 years too late. (Not that I participated: I missed HD and I missed cheapo Florida houses).

I have not seen anything cheap and with long term potential recently. But I am willing to listen to ideas. :)

 

Home builders might be a trade since they have not run up. They are not hold-forever investment IMHO.

 

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  • 3 weeks later...

It looks like most of the home builders have actually run up through multiple expansion such that even if we were to increase our housing construction, it would not necessarily make for the best way to participate as an investor.

 

It's beginning to look like residential housing related stocks (like USG) or maybe even in regional banks would be a better way to invest in this.

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  • 9 months later...

once people are able to save up for down payments

 

The real estate market got really hot when people didn't have to do this.  ;)

 

On the origination side, credit is getting tighter because nobody with a brain wants to make subprime loans (QM rules, reps and warranties, dramatic increases in the cost of servicing delinquent loans, etc.).

 

On the inventory side, foreclosures are finally working their way through the system.

 

---

 

Here's my opinion of the management of homebuilding stocks:

 

The best  - NVR

 

Above average - TOL, LEN (especially the B shares)

 

Average - Pulte

 

Below average - KBH, AV Homes

 

Bad - HOV

 

Really bad - CHCI

 

A year or two ago, it was easy to figure out the quality of the companies by simply looking at the return on assets.

 

Toll Brothers and Lennar are at their 52-week lows.

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US new housing construction remains at a very low level historically despite the recovery in the past few years.

 

The negative sentiment is either housing has gone up a lot (prices yes) or the younger generation no longer lives in houses and they rent apartments in the city.

 

If you look at the US economy sector by sector, I am hard pressed to find one that has better potential than housing.

 

Some of the good vehicles are NVR certainly (barely sold off), MHK (down some), HHC (fell like oil stocks given it has assets in Houston), JHX (very high quality IMHO), and BRK which also has sizable housing exposure.

 

 

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