Keepin' It Real  

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Timber REITs: Renewable Profits?

  • To read the full report, click here to visit Seeking Alpha!

  • Timber REITs have seen signs of rejuvenation in 2019, powered by the recovery in the single-family housing markets, which has sprung back to life over the last six months.

  • The roller-coaster ride for lumber prices continued into the second half of this year. After hitting record highs in May 2018, prices plunged 50% through May 2019.

  • Since bottoming in 2019, however, lumber prices have recovered more than 25% as the monthly rate of housing starts and new home sales hit 12-year highs this summer.

  • Long-term fundamentals look strong for the Timber REIT and broader housing sectors, powered by demographic trends that suggest a revival of the suburbs and single-family housing in the 2020s.

  • Oversupply remains an issue in both the Southeast and Pacific Northwest. The use of biomass as a fuel source remains a wildcard. We see superior long-term value in the vertically integrated REITs.

To read the full report, click here to visit Seeking Alpha!

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