Homebuilders: The 'B' Word
The scorching-hot single-family housing market has finally cooled in recent months as record-low housing supply and soaring home prices have forced potential buyers to pause their home buying search.
Would-be buyers are facing an increasingly tight rental market, however, as apartment and single-family rents are suddenly soaring and rental rates are quickly closing the gap with home values.
The B-Word? Soaring prices have renewed the perennial "Bubble" calls from pundits, but fundamentals suggest that we're instead more likely to see a somewhat "boring" return to normalcy ahead.
Rising rates remain a key risk factor, but residential real estate has historically proven to be one of the most reliable inflation-hedges and supply/demand fundamentals remain extremely compelling.
Discounts are few-and-far-between across the housing markets, but homebuilders are now on sale following a 15-20% correction. Builders are quintessential "Growth At Reasonable Price" stocks, trading at single-digit forward P/E multiples despite double-digit growth rates.
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