The Housing Market

[Triplethought]

When you ask yourself what sectors are (or will be hot) one thing everyone seems to agree on is that housing prices and building new houses will grow in 2021. Now maybe it won't be impressive if it's only 10% growth compared to AI or tech sectors but you can pretty much guarantee the growth (versus riskier tech stocks).

What the market needs is AI home builder right?

Thought I'd share my thoughts here . Of all house builders I'm most keen on those that can build with automation. That's why I like CVCO versus the conventional builders. I actually think whichever big company figures out how to automate the crap out of home building (including automatic large scale installation of water, sewer, and power) is going to be huge. Think about pre-fabbed everything in a factory or automatic brick laying robots (link below). This will become so huge that I think home prices will eventually COME DOWN when the trend takes off. I'm not sure if that's 5 years or 10 years away. Or whether the automation will be more in apartment complexes first (very likely). I prefer NOT California builders. Places like Texas with low taxes and high growth make sense.
So far I've identified these as my favorite plays:

GRBK - I bought 1/3 lot at $22
SIC - limit order @$6.22
LEGH - limit order @$14.66
CVCO - limit order @$174
DE - bought 1/3 lot @$254.50 John Deere is creating AI on their tractors exhibiting at CES so this is a farm play too. 20% to 30% of a home cost can be leveling and prepping the land. I've done great with this one since 12-14 when I bought.

ETF?
ITB - limit order @53.75

Warning I'm a stock rookie and I've done no technical analysis on these. I just think psychology dictates that prices should drift up over time. (i.e. we need a house) Please share your thoughts.

https://www.youtube.com/watch?v=EGBRA24qlEg

[MarkD]

I am familiar with the fact that hotels have been factory built and site assembled for several years. Have not kept up with this trend but know there are lots of interested parties in affordable housing.

The one segment that will remain strong is renovation which will likely come under pressure immediately if prefab can be done on a macro scale. But factory built homes have been around for a long, long time (CARDINAL Homes, e.g.). That requires factory and transport. As energy is going up via oil, the ideal imo has to be site built with less labor. Here's a European firm with an interesting idea:

https://gablok.be/en/

[Triplethought]

I am familiar with the fact that hotels have been factory built and site assembled for several years. Have not kept up with this trend but know there are lots of interested parties in affordable housing.

The one segment that will remain strong is renovation which will likely come under pressure immediately if prefab can be done on a macro scale. But factory built homes have been around for a long, long time (CARDINAL Homes, e.g.). That requires factory and transport. As energy is going up via oil, the ideal imo has to be site built with less labor. Here's a European firm with an interesting idea:

https://gablok.be/en/

Meh. I'm unimpressed with the gablok video. DIY is not what I'm talking about. First, no automation of dirt work, slab, foundation. Those were all in place before the video and all look standard construction. Second, It looks like they end up using way more lumber than stick built and not much less labor. I'm not clear if they're using air for their insulation but it looks like it. Third, I see no provision for plumbing, electrical, and heating pre-fabbed in the walls. Doing it afterwards is just dumb when we know that all has to go in. I'm talking about building HUNDREDS of houses at the same time.

Unfortunately i don't see renovation being scalable on the level I'm talking about - where we can invest in a public sector company and where homes could be delivered and setup in a matter of days.

IMO "Site built with less labor" means either prefabbing in a factory or using robots on site. The conventional builders have already squeezed a lot of costs out of stick built homes in quantities.

[MarkD]

The current reality, there are literally dozens of subcontractors with hundreds of suppliers involved in the construction of a simple home in the USA. All of the integrated systems involve different equipment, materials, and skill sets. It's one reason why Sol correctly stated a skilled carpenter is not going anywhere for a period of time beyond AI development. There are some things that can't be duplicated easily just because we can.

There are cheaper housing models on the way. An example is digital printing the shell of a home. Housing may have near term opportunities for shell construction, but all of the site prep, foundation installation, utility connections, framing, exterior envelope, interior finish, require a lot of different inputs. It looks easy, and we haven't even talked about contracts, procurrement, schedules, quality, bureaucrats, banksters, brokers, developers, insurers, acts of God, protests, etc.

I lived in this world. You cannnot imagine the number of inputs to what appears to be a simple model. Improvements will continue but we may be looking at a long term program imo.

Small units that are somewhat like mobile homes is the closest we will get for a period of time methinks.

[semantic]

Any thoughts about tiny houses?

https://en.wikipedia.org/wiki/Tiny-house_movement

[Eric]

Any thoughts about tiny houses?

I suspect the bulk of the market is second-half millennials and early Gen. Z that have failure-to-launch and are pretending to "adult" (as in: 'look at me, I am adulting so much right now') in their parents back yard. Parents are allowing it because little Chad shouldn't have to participate to get a trophy, participation is hard...here's your trophy for materially existing.

[George1010]

One major issue is inventory and the second is that people are moving from the blue high taxed states to lower-taxed states that offer a better bang for the buck

[Budge]

One major issue is inventory and the second is that people are moving from the blue high taxed states to lower-taxed states that offer a better bang for the buck

Then we'll hear the cry that these outsiders are driving up the price of homes out of the reach of the locals. Plus ca change...

[langdj]

The migration might not just be Red to Blue but city to suburb and then perhaps suburb to rural. I live in a mildly affluent blue state (Massachusetts) suburb . You can sell a house in one day here and probably above asking price (my friend just did it)

[Triplethought]

The migration might not just be Red to Blue but city to suburb and then perhaps suburb to rural. I live in a mildly affluent blue state (Massachusetts) suburb . You can sell a house in one day here and probably above asking price (my friend just did it)

we had 10% growth in housing prices in 2020 and zillow is projecting 10% for 2021. I haven't raised my rents in proportion to the new cost basis and with my higher returns here it's tempting to sell them and go full on into the stock market. But ..portfolio diversity right? I'll be glad to have those houses if the stock market disappoints. Turtle versus the Hare argument I suppose.

[langdj]

The migration might not just be Red to Blue but city to suburb and then perhaps suburb to rural. I live in a mildly affluent blue state (Massachusetts) suburb . You can sell a house in one day here and probably above asking price (my friend just did it)

we had 10% growth in housing prices in 2020 and zillow is projecting 10% for 2021. I haven't raised my rents in proportion to the new cost basis and with my higher returns here it's tempting to sell them and go full on into the stock market. But ..portfolio diversity right? I'll be glad to have those houses if the stock market disappoints. Turtle versus the Hare argument I suppose.

I am looking to sell my rental. However, I am waiting for one or my tenants to move out (duplex, long term tenants it could be years) or until the CDC lifts the eviction monatoriam (not a typo, CDC has power over landlords?) Right now landlords are neutered so I am just holding the line

https://www.cdc.gov/coronavirus/2019-nc ... r-faqs.pdf

I think the government will allow us to rejoice when enough people have "bent the knee" and taken the vaccine. That might be a good time to sell.

[Budge]

The migration might not just be Red to Blue but city to suburb and then perhaps suburb to rural. I live in a mildly affluent blue state (Massachusetts) suburb . You can sell a house in one day here and probably above asking price (my friend just did it)

Can you imagine the scramble/panic if (or when) interest start to go up?