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  • Jonathan Poyer

Housing a Bright Spot for the Economy - How About for Investors?



Bloomberg has an interesting article on housing and whether it is a "bright spot" in the economy:



There seems to be a drumbeat about how worrisome we should be about real estate. But real estate is a gigantic market and there are always pockets that are doing poorly and pockets that are doing well.


From the article:


But rather than conditions worsening in the first quarter of 2023, they got better. Homebuilder sentiment has improved for three consecutive months. While it’s not quite back to a neutral level of 50, fears of another backslide have abated. Instead of builders sitting on a glut of unsold homes that they had begun building during the pandemic, last week's housing data showed that the number of single-family homes under construction has fallen to the lowest level since October 2021.


And after bottoming in November, single-family housing starts have picked up a bit — not the surge we saw in mid-2020, but another sign that builders feel like they are in a position to continue building in the current market rather than pulling back even more.



We have long held the view that the shortage of affordable housing on a national level resulting from the 2008 financial crisis along with the strict mortgage underwriting standards followed since then will support home prices and result in high recoveries in any cases of mortgage default.


This heatmap is one way to think about the landscape:




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