The Best Housing Plays. Zig When Other Investors Zag

Nov. 25, 2022 10:32 PM ETAGNC, DHI, HOUS, MFA, MTG, NLY, PHM, RDFN, RDN, RKT, RWT, UWMC9 Comments
Gary J. Gordon profile picture
Gary J. Gordon
2.27K Followers

Summary

  • Yes, the housing news is terrible.
  • But there are a number of positive themes as well, like a housing shortage, a near-top on interest rates, and much lower stock prices.
  • Considering all the variables, realtors and mortgage bankers still are not cheap.
  • Homebuilders are cheap to long-term value, but the near term is tough.
  • I recommend now both mortgage credit risk and interest rate risk managers like MGIC, Radian, Redwood Trust and AGNC.

Excited Family Moving In New Home

miniseries

The best housing plays? Am I kidding? With these headlines coming at us fast and furious?

Home sales declined for the ninth straight month in October.” (CNBC, November 18, 2022)

’This will be the first year since

Housing stock valuation table

Seeking Alpha

Home sale history and forecast

National Association of Realtors, Census Bureau and Fannie Mae

History of the number of realtors

National Association of Realtors

Home mortgage origination history and forecast

Fannie Mae

Pulte price/book history

Pulte financial reports, Yahoo Finance

Home mortgage chargeoff rate and new home sales

Federal Reserve, Census Bureau

Home mortgage debt service ratio

Federal Reserve

AGNC stock price compared to mortgage-to-Treasury yield spread

Yahoo Finance, Freddie Mac, Federal Reserve

This article was written by

Gary J. Gordon profile picture
2.27K Followers
Gary Gordon’s career was on Wall Street, where he was a stock analyst covering the housing, mortgage and consumer finance industries. He also served as a U.S. investment strategist and as a portfolio manager. The bulk of his work career was at PaineWebber and UBS. He is now retired. Mr. Gordon is an adjunct professor at Mercy College in New York. He teaches economics on campus and math at prisons (Sing Sing and Taconic in New York). He also presents financial literacy seminars to adults and students. He is on the Board of Hudson Link (college education for incarcerated men and women) and the Baron de Hirsch Fund. Mr. Gordon is married with two young adult children. He has degrees from Colgate University (BA '74, philosophy) and The Wharton School (MBA '77, finance).

Disclosure: I/we have a beneficial long position in the shares of MTG RDN RWT AGNC PHM MFA NLY either through stock ownership, options, or other derivatives. 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.

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