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Bob Wetenhall, RBC Capital director of equity research, on why there is room to run for real estate investors.
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Act now real estate rebound housing starts at their highest level since summer 08.
And my next guest says they're gonna fly even higher this year joining me now RBC capital director back.
He says Bob -- -- to you know.
Home builder stocks up 92% pretty much in 2012.
And ETF.
On homebuilders up 70% but you say there's still room to run why that's right -- -- look.
And -- new residential construction activity.
Which is measured by housing starts and we're anticipating a 22% increase to 950000.
Starts we're in the second or third inning.
Of a multiyear recovering the housing industry.
So if you -- participating in the home go to recovery last year through equities there's still time left -- not too late.
Yeah I -- figure in a researcher you actually see some of the stuff going up 30% this year.
That's right we're excited by the prospects really for three reasons are driving this broader recovery.
Tight inventory levels.
Low interest rates.
We finally have price stability so stable pricing environment is a crucial psychological factor that's necessary to support recovery collectively these tranche of providing a tremendous -- when -- under built during the last five years we're starting to catch up.
So far so good give his -- your favorite home builder stocks you really like three names and in particular so Katie Holmes is a West Coast passive play inventory levels dramatically -- in California.
And taxes we think this is a great way to express or constructive view on this and markets we really -- best of breed home builder is Lennar it's our favoured for a long time.
Best land -- in the U last.
Best management team we also like becoming called multi homes which some turnaround story you've done a tremendous strides in improving gross margin improvement and daughter all of so much how do you know when to pull out pull back at what point inside value got to start trading down didn't -- that -- gets -- for -- doubt never hold anything forever that's that's an aggressive call.
You are real view on this is how where are we in recovery cycle and we're still in the early stages of it so if we had 30% on -- about -- -- -- about 30% in just to give you some contacts the long term average for housing starts since 1981.
Is one point four million homes so we're about 950000.
Is our forecast for 2013.
Where 40% below the average.
So all right peak it's over two million were still 50% lower than the one thing here -- all the -- -- gonna make a big error again in over billed as they start buying into this nice recovery.
And DO worry that -- government easy loans motive that that it's pushing this recovery at a time when the average American household has maybe 7000 dollars in cash and can't afford to put -- down payment on -- a great question so what could be real housing recovery what could threaten our investment pieces and take everything off track we're really in our view.
We went in to the recovery because the housing market -- but housing will also lead us out of the recession and we're looking for increased housing growth to support job creation would -- should drive better consumer confidence and that's -- -- by the -- and are we -- -- -- -- A cycle until it inflates into another bubble -- -- still got a long way before that's gonna happen thanks so much -- -- -- hall thank you elect him.
Home and we're gonna have a guest from -- actually it is -- it coming up in just a little bet.
Deep in the heart attacks.
-- real estate story and how it has prospered.
Even.
