Jul

13

There are those, like Doug Kass, who are pounding the table and screaming about the dawn of a multi-year housing boom in the US.

Yet I remember reading in Barron's a few years back that the major determinant of long-term housing trends is the formation of new households. Many kids, who have had trouble finding a job that pays sufficiently for them to run their own household or not having a job at all, have moved back in with their parents (the boomerangers). We've deported a lot of folks, too (who might otherwise form households), and there's been no increase in immigration quotas. In general, it's only the middle-aged and elderly that are growing in size, and those age groups aren't known for lots of new (or net) household formations.

So where's the increase in households going to come from to drive that boom in the market? What makes me even more confused is the comment on the Toll Brothers call that the company finally has pricing power in 16 or its top 20 markets.

Something's not right here.

If there is a boom, or even a boomlet, do you go with Toll? Lennar? Ryland? Or the suppliers (small caps like Lumber Liquidator or large caps like Home Depot)?

Thoughts, ladies and gentlemen?


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