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Builder confidence held steady and is seven year high in January that's according to the latest national association of homebuilders survey so what does it mean for the housing recovery and the recent run up in home building stocks -- Bob -- -- he covers homebuilders is a senior analyst RBC capital markets Bob thanks for joining us you know like -- believe it -- not but home building was one of the best performing sectors in 2012.
We are seeing signs of a recovery there's no doubt about it.
What can we expect for this year though how can we get a gain more traction we just gonna kinda slowly build.
You know what we're actually really optimistic on the outlook for housing in 2013.
Three things are really talking about low interest rates number one.
Tighter inventory levels number two and a stable pricing environment so although the overall economy in the back -- remains sluggish.
We think housing it's a bright spot.
One of the critical issues we talk about a lot is the availability of mortgages the standards of very very stringent.
Do you think we'll see a turnaround so -- are gonna go back to the a mortgage for every one policy of the of the olden days but will we get back to what will be considered somewhat normal standards because -- pretty strict right now.
-- great question that -- big headwinds facing the homebuilders right now besides the overall sluggish environment in the economy.
Our uncertainty on the political front -- Washington DC.
And the status of mortgage reform which is definitely an impediment.
Towards the recovery but our overall view.
Is that -- -- afford to get housing back on track to heal the economy.
If you want do anything from a political standpoint which could prevent greater accessibility of credit were obviously not going back to the good old days and that's something.
Which is not gonna happen yet we learned the lesson -- now as for the homebuilding sector which stops you find particularly attractive right now.
Our best in class if you're looking for Smart risk adjusted return.
Attitude a five year holding period is written Lennar.
Which is one of the premier builders with the marquee management team -- for moving out looking for riskier play can get -- turnaround story.
Like Paul -- -- which is definitely intensely focused on improving its return on capital.
And -- to a lot of West Coast stassen played it to look for a recovery in the sand states Katie Holmes is a great stock for that.
Good names now look not on their last earnings report gave somewhat of a tepid guidance -- this year why is that.
People are kind of thrown off by yesterday's earnings numbers it was a high quality beaten our opinion but because it's really transforming itself from a traditional.
Sticks and -- home builder.
Into a diversified real estate company and -- announced their entry into the multifamily industry multifamily rental apartments we think it's a strong long term move and we have confidence that management will execute against its plan.
They continue creating shareholder value it.
KB home you mentioned KB now they've really catered to first time -- is is there a big market is right time buyers out there right now with the all this uncertainty in the difficulty of actually.
Have absolutely there's still a tremendous pent up demand we've under -- housing for the last five years in the US.
But the reason -- really preferred TV is that 75% of this company's sales derived from California Texas.
And Iraq -- very bullish on the California market in Texas market.
Inventory levels in both states to -- by more than 40% last year.
So tight inventory supply from provides demand construct we need to -- -- outperformed the peer group.
Lots of encouraging signs thank you so much Bob what -- of -- RBC capital markets thank you Bob very much in home prices also coming up will be it is panels hospitals.
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