Homebuilders - A Thought Experiment (ITB)
I wonder if home builders are a good investment here, or did they front run all this building that they are doing and the recession takes them down? We are approaching all time high before a recession - (lower rates would be a stimulus, higher for longer means resistance)
Bottom line - will consumers with an average EPR nationally of 3.5% trade in those rates for 7% rates - and for what reason? New Job. Better Life. New House.
If (as) rates come down this decision gets easier.
I'm a housing bull, but we are at some serious resistance here soon (all time highs)?
Let's look at why the consumers is going well, low rates and low debt service!
ETF - ITB (largest builder ETF)
Builders are the only industry group that can solve this inventory problem.
Mortgage Advisor Tip: Look at industries to invest in that you understand well.
Do you think the builders are going to save the day? They've built around 6 million homes in the past decade compared to 27 million 2000-2010. They're also building for profit and it seems that they have shifted mainly into multi family and are just rushing to build their backlogged SFR. Im truly concerned as inventory has been declining since 2015. If not the builders, who can fix the inventory problem?