Seeking Alpha

The Entire U.S. Housing Market In A Single ETF With Hoya Capital Real Estate (Podcast)

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About: ETF Series Solutions - Hoya Capital Housing ETF (HOMZ), ITB, REZ, XHB, Includes: DRH, EQR, HD, JPM, KBH, LOW, MAS, MWK, RDFN, WFC, WSM, Z
by: Let's Talk ETFs
Summary

Popular Seeking Alpha contributor Alex Pettee, aka Hoya Capital Real Estate, joins the podcast to talk all things U.S. housing market-related.

He believes that more than a decade of “deferred household formations” among generations X and Y has created the conditions for a major run-up in housing sector-related names.

To fill what he felt was a void in the available set of ETFs offering exposure to this sector, Alex launched the Hoya Capital Housing ETF in March 2019.

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By Jonathan Liss

My guest today is the Founder, President and Director of Research & ETFs at Hoya Capital Real Estate, Alex Pettee. Hoya Capital Real Estate is a Connecticut-based registered investment advisor that is working to make real estate investing more accessible to all investors. In that vein, Hoya Capital advises ETFs and individual accounts by investing in portfolios of publicly traded commercial and residential real estate companies.

Alex also goes by the moniker Hoya Capital Real Estate here at Seeking Alpha. He’s been a contributing author since 2015 - around the time he founded Hoya Capital - building up a following of more than 12,000 investors with his unparalleled analysis of the U.S. real estate market. Last month, he joined the team at the iREIT on Alpha marketplace service, run by Brad Thomas, to provide the macro side of the real estate investing equation.

In March of this year, Alex launched the Hoya Capital Housing ETF (HOMZ), which is really the first fund to offer exposure to the entire U.S. housing market in a single fund. Going beyond the homebuilders and mortgage REITs that are included in many housing ETFs, HOMZ includes the entirety of industries related to housing including home improvement and furnishing names, mortgage lenders, financing and technology companies in the portfolio, which tracks the Hoya Capital 100.

During a wide-ranging conversation, Alex and I cover the U.S. housing market from both a top-down and bottom-up perspective.

Topics covered:

  • 3:00- Hoya Capital’s Backstory: How did Alex become “obsessed” with real estate as an asset class and come to launch the Hoya Capital Housing ETF.
  • 5:45 - A year of firsts: Alex joins the iREIT on Alpha Seeking Alpha Marketplace service as the “Macro real estate” specialist.
  • 10:20 - Lower rates vs. recession concerns: Which trend has the upper hand in the U.S. housing market?
  • 18:15- When will the backlog of “deferred household formations” among Gens X and Y finally enter the housing market?
  • 22:15 - Viewing current homebuilder valuations in light of the massive run-up YTD (XHB) (ITB).
  • 24:40- Current dynamics in the rental market (REZ).
  • 29:55- HOMZ - The entire U.S. housing market in a single ETF.
  • 33:00- Looking under the hood: Understanding sector caps and weightings within HOMZ.
  • 37:30 - HOMZ: More of a capital appreciation or an income play?
  • 40:40 - Creating an ex-U.S. equivalent to HOMZ is harder than it seems.
  • 43:45 - In search of a higher quality higher-yield real estate product.
  • 45:45 - Maintaining a fair playing field in the ETF space.

Disclosure: I am/we are long HOMZ, HD, VNQ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Alex is long HOMZ. You can download a full list of HOMZ’ holdings updated daily at www.thehousingetf.com. Alex is also long HD and VNQ.

Jonathan Liss is long VNQ.