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Proprietary Data Insights Top Financial Pro Homebuilder Stock Searches This Month
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Get Ready For Some Insanity In 2024 |
In tomorrow’s Juice, we’ll discuss where we think the stock market is headed in 2024 and why. Preview: Buckle up, because it’s going to be insane. Will this insanity have anything to do with what happens in the November elections? Our take might not be what you’re expecting it to be. But first, today … on how it appears housing will shake out in 2024. Last month, we kept with our longstanding theme that there hasn’t been much relief on housing affordability. Don’t expect that to change anytime soon. Without many catalysts, housing prices are up year-over-year in many cities and, depending on where you get your data, nationally. Just wait until we get some catalysts. Here’s some of what we said in November: The Juice doesn’t just think we’ll see a modest increase in housing prices in 2024 and 2025. We think bidding wars, people paying way over asking price, cash buyers, the return of big investors and homebuyers on the lower end scooping up relative deals in places such as Pittsburgh, will cause prices to skyrocket. So, speaking of bidding wars. The key right now on the return of bidding wars, which helped fuel so much of the outrageous upside in housing in recent years, is interest rates. They’re coming down. Now, hovering around 7% for a 30-year mortgage, expect them to fall in the 6’s come 2024. That’ll be enough to do two things:
On the first group, they haven’t waited to buy because they don’t have good jobs and cash in the bank. On the contrary, they’ve been smart to not bite off more than they can chew. Presumably, they’ve been saving while they sit on the sidelines. And they’ll be ready to pounce when rates hit or come close to their number. Six percent will look mighty attractive for large numbers of well-heeled buyers. On the second group, a mortgage lender interviewed by Fortune summed it up well: Many of those folks will decide to take their huge profits, sell, and buy something else. Those buyers will ignore higher rates with a plan to refinance when they eventually come down. Higher supply, higher demand, [and] lower rates will mean more mortgage applications. Flush with cash — thanks to record equity in the home they just sold — this group will have the financial firepower to be uber competitive. Plus, as this lender also noted, they’re “tired of where they’re living” and itching to move. Taken together, we think we’re going to see the return of bidding wars sooner rather than later. And The Juice isn’t alone in this thinking. We watched Redfin (RDFN) chief economist Daryl Fairweather make some serious sense on Yahoo! Finance the other day: If rates fall below 7%, I think we’re going have a surprisingly strong year. That’s when I think we’re going to see more people out there with bidding wars … They’re going to be more people who are wanting to move because they have a new job or they’re getting married or they’re having kids, so people’s lives go on and that creates demand. And if we have a strong stock market, people may feel good about spending money, but those high rates are the biggest drag on the housing market right now. And bingo was his name-o! A strong stock market. Add that to the list of factors:
This is a recipe for a stronger housing market than we think anyone expects in 2024. So we’re bullish on housing now and into 2024. Expect insanity at least equal to what we’ve seen before, if not more, expressed, in part, by an increase in bidding wars. Speaking of bullishness, let’s carry that theme into today’s bottom line. The Bottom Line: In that November Juice we linked to earlier (this one), we touted our April 2022 bullish call on homebuilder stocks: Since we said that, PulteGroup (PHM) is up roughly 107%. The other homebuilder stocks that populate today’s Trackstar top five have also done well for themselves over the same period:
All of those names, except one, show up in today’s Trackstar top five of the homebuilder stocks financial professionals search for most. We crushed those picks. We continue liking all five stocks. And, over the last month, they’ve continued to rally. Every stock on the list is up by double digits, led by MHO (+22%) and PHM (+18%). This blows away the S&P 500 and even tech-heavy Nasdaq 100, which are both up just 5% over the same period. So, you can make money in areas other than tech, which is something we’ll discuss in tomorrow’s look ahead to 2024’s politically-charged stock market. |
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