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Susquehana International Group analyst Jack Micenko argues housing is moving in the right direction, but far from recovered.
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-- -- a -- reports on housing lifted sentiment on Wall Street today and provided a lot of the latest sign that maybe -- -- recovery in the housing sector is on some solid -- Period my next guest and seem to think Sony says it had financing or the lack thereof could actually be -- threat.
Joining us NASA's from an analyst Jack missing go -- -- you behind these.
It's demand is up where growth is improving for the daughters and in some cases prematurely 25 personal growth.
That said we're a long way back to -- market we're gonna do maybe through 75000 new homes this year.
Prior -- was one point four.
So we're moving in the right direction but but housing is far from being.
But it's -- we you and I were just talking in the break it seems like it's two separate story -- it's the housing market.
And then there's the home builders as a stock right so when you look at them they're fundamentally.
You think -- -- we think they're very expensive we think.
The builders on average -- downgrade the stocks in late September and you generated four of them just so people know DR Horton and Lennar pull T homes and told brother.
Yes and those are the most stretched on valuation basis -- mine now.
We think about that prior peak of one point four million homes in 2005.
Drastically different credit environment for mortgage availability.
The -- today on our math looking at current market shares are pricing in two and a half million shared her to half million.
New home sales -- year so we're well what the stocks are pricing in.
Obviously any equity prices in the -- potential however were were so far beyond prior peaks right it if the numbers are just -- ultimately disappoint.
And that we also look at the regional banks -- you're saying.
Lending is not there -- it is who that wants a -- money at these rates for thirty Harrison that is the basis for our view on the demand side is the the mortgage perspective if you look at the run.
-- -- -- -- Easy credit drove a lot of the excess demand we went from 64 to 72 and homeownership rate we're our way back down what changed.
Credit was seizures usually get a mortgage so we think if that doesn't return than the demand characteristic will be different as well so not just rate right it's hard to make money in a thirty year three and a half percent -- But beyond that under Dodd-Frank but US banks you have to adopt Basel III rules now let's -- at some.
A visited -- more capital against a higher loan to value mortgage.
And they don't wanna do that because it's less money because it's less -- give out and it's a lower ROB lower every business for the banks to less profitable business.
So whether it's the current rate environment whether it's new capital rules gonna go in effect and -- thirteen.
Anxious to want to make those those most people for the amount -- It's an and we were just talking to the FHA might need a bailout that does not help the situation at all Jefferson -- I'm glad you.
Shut should've stated -- behind the readiness several look too happy about all this today.
Announced the truth that you are.
