TRADEX
GLOBAL INTERNAL COMMENTARY
Building applications
issued in November rose to a four year high. Permits climbed 3.6% to 899k
annually, the most since July of 2008. The forecast by economists was for 875k,
so this was a pleasant surprise. Housing starts fell 3% to an annualized rate
of 861k, but the 3 month average rate of housing starts was the strongest since
August 2008. Record low mortgage rates and a slightly improving jobs market
will probably make 2013 the best year for builders since 2007. The one variable
is the lack of private mortgage origination.
The GSEs are making 9 out of 10 of every mortgage origination. Private
banks need to start lending to keep this trend alive. This is positive news for
our Liquid Real Estate Portfolio (up 14% ytd), as improving fundamentals will
decrease defaults and severities will improve on properties that do end up
falling into foreclosure. Also, we believe that we are close to the end of the
refinance wave that have put some IOs (interest only derivatives) under
pressure this year. This asset class may be the biggest winner in 2013 and we
will watch closely and increase allocations as pre-pays start to slow. Keep
nimble - Michael Beattie
EXTERNAL
RESEARCH COMMENTARY
The number of building applications issued in November rose to a four-year high, a sign the U.S. housing-market recovery will extend into 2013. Permits, a proxy for future construction, climbed 3.6 percent to an 899,000 annual rate, the most since July 2008 and exceeding the 875,000 median forecast of 58 economists surveyed by Bloomberg, Commerce Department figures showed today in Washington. While housing starts fell 3 percent to an 861,000 pace, the average rate from September through November was the strongest since the three months ended August 2008. Record-low mortgage rates and an improving job market are giving Americans the confidence and wherewithal to buy a house, boosting builders such as Toll Brothers Inc. (TOL), which are now able to raise prices. Gains in housing will help shore up economic growth this quarter as businesses curb spending on concern lawmakers will fail to avert the tax increases and spending cuts slated to take effect in 2013. “We’re headed higher and next year is going to be the best year for housing starts that we’ve seen since 2007,” said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh, who projected starts would drop to an 865,000 pace. “Housing is coming back.” Stocks were little changed as President Barack Obama and Republicans continued budget talks. The Standard & Poor’s 500 Index fell 0.2 percent to 1,443.52 at 10:36 a.m. in New York.
The number of building applications issued in November rose to a four-year high, a sign the U.S. housing-market recovery will extend into 2013. Permits, a proxy for future construction, climbed 3.6 percent to an 899,000 annual rate, the most since July 2008 and exceeding the 875,000 median forecast of 58 economists surveyed by Bloomberg, Commerce Department figures showed today in Washington. While housing starts fell 3 percent to an 861,000 pace, the average rate from September through November was the strongest since the three months ended August 2008. Record-low mortgage rates and an improving job market are giving Americans the confidence and wherewithal to buy a house, boosting builders such as Toll Brothers Inc. (TOL), which are now able to raise prices. Gains in housing will help shore up economic growth this quarter as businesses curb spending on concern lawmakers will fail to avert the tax increases and spending cuts slated to take effect in 2013. “We’re headed higher and next year is going to be the best year for housing starts that we’ve seen since 2007,” said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh, who projected starts would drop to an 865,000 pace. “Housing is coming back.” Stocks were little changed as President Barack Obama and Republicans continued budget talks. The Standard & Poor’s 500 Index fell 0.2 percent to 1,443.52 at 10:36 a.m. in New York.
Tradex Global Advisory Services, LLC
investorrelations@thetradexgroup.com
203-863-1500
@Tradex_Global
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