Our Top Housing-Related Pick
Robust third-quarter housing data has stretched most valuations.
Compelling third-quarter data allowed a collective sigh of relief among investors holding housing-related stocks. Earlier in 2019, disappointing construction data fueled speculation that home construction had peaked, but building is back. Demand is robust, mortgage rates and rents are down, and builders are eager to work. These improving fundamentals have sent valuations of related coverage sky-high.
We still expect builders to break ground on 1.3 million new homes in 2020 before gradually climbing toward our midcycle estimate of 1.4 million homes annually. That leaves us above consensus over the next few years, and yet, from homebuilders to apartment real estate investment trusts, every related industry looks overvalued at current prices. Investors are right to believe that management execution matters, but they may underestimate how relevant the housing environment is to business fundamentals.
Charles Gross does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.