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-- -- keep that a mind.
Well there is positive data out for housing today as existing home sales are rising to their highest level in three and a half years.
But that -- not have to keep housing stocks from selling off on concerns from the -- A joining me now is David Goldberg UBS homebuilding.
Analyst David this is your -- or are you concerned by the selling pressure that you're saying today in the homebuilding sector.
When we're not really I mean look -- stocks are extremely volatile you've -- big moves up on the big moves down the last two months.
I'm not overly concerned -- -- investors are probably over reacted to this point.
You know when you think about kind of what's going on the housing market today.
It's a very supply driven phenomenon there's anemic supply in the area for people want to live.
It's a higher quality buyers -- for the next twelve months housing pricing we just fine.
You're not worried then about the fact that we may be seeing mortgage rates -- hire me because their focus on the bond market yesterday and treasuries.
And then again at the fact that that that Ben Bernanke told -- that he will be pulling back stimulus towards the end of the year are you not concerned that those interest rates are gonna affect.
You know the secretary of -- the basic question to you but but I would think that there is.
Concerned bullet I think it depends in your time -- -- the longer we look out into the recovery whether it's 1824.
As the recovery spreads out of the really good areas it's been concentrated and right now.
Of course affordability is a concern but you gotta be what affordability alongside an underwriting what standards look like -- who can get mortgages and who can't get mortgages.
But again I think that's an 824 months in the in -- The recovery -- been really concentrated it's been concentrated among good buyers that have very good financial wherewithal they have good credit scores.
In a very very tight part of market very very -- -- -- sub market.
Where there's just a lot of body inventory so you're reading it affects the long term -- of the housing recovery absolutely you can't security rates don't matter of course they matter.
It's our question and it's how strong recovery -- again we get eighteen to 24 months out it changes the slope a little bit but we're still not market for short so.
It sounds to me David like what you're saying is that is that the housing sector -- stocks themselves.
Got way ahead of themselves.
That's exactly right the group was expensive we've seen a bit of a pull back.
I think you know -- can't have a 6912 month timeframe you can buy these stocks -- get cheaper through the summer.
Coming in the year and the news was gonna remain very good for twelve months long term from the fundamental perspective the stocks are not expensive at this point.
And we -- need to see another fifteen to 20% pullback before got more positive -- much longer term basis.
The only light.
Don't -- Beazer Homes I think this is it's an elect Beazer Homes because we've got pulled tee and Hovnanian and these -- stocks that are performed so well.
-- is the only one the -- -- on right now why.
Right and it's very much of valuation call right -- just been struggling with a bit of a company turnaround management is doing a great job it's taking time -- to materialize in -- the results in terms the profitability.
You're gonna see the company really narrow pure relative underperformance in the next two years and valuation catch up to the -- the group.
Otherwise the stocks -- again not they're not been on an expensive at this point right -- still expensive.
If you saw pull back and then -- -- -- you might make a lot of sense some real good company specific factors that are going on there right now but not not at this price.
Does this say policy is a name that's been up what a 117%.
I believe over the last year and that's a heck of a run up but I would.
No -- at least I would throw the caution now would you say wait a minute that's a big jump but actually -- on the sector in 2000 and while.
-- the one at the sky's the limit for some of these things.
Well and does this -- -- -- we -- been much earnings power we have thing but what the future valuations gonna look like you know what future earnings are gonna look like there's a lot of earnings power inherent in bull in pull -- business right now.
You think they have a sector called Dallas segment called Dell -- -- 6555.
And older it's a really powerful demographic -- following so look I think there's a lot of earnings power in the business that's probably not -- the valuation.
Even after the big run again it's not attractive were still neutrons shockingly clear about that.
But it became nine -- 1015%.
We be looking to get get more constructive for short.
David I'm actually old enough to remember that you tell the acquisition by the multi like -- -- a lot of times yeah.
David Goldberg at UBS homebuilding analyst David thank you very much thanks so much for me on.
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