it

A Good Time to Upgrade Your Home? It Depends Where You Live

residential housing appreciation should

I buy a larger house now or wait is

depends on and where you are buy a

larger house now I guess you'll have

more capital in the housing market right

if this person has a penny Oh capital

allocated the housing should is this the

time to upgrade have more capital in the

room yes generally speaking I guess

things yeah why do we think there's a we

think there's upside there yeah upside I

mean but you know I've actually been

thinking about this myself and I think

it is regional specific because I'm not

sure then the kind of Stanford grant

Greenwich area there's a lot of upside

and larger houses a lot of that's driven

by employment from Wall Street etc right

well yeah if you have the D

financialization you know rotation in

the economy broadly or in the tri-state

area that's that's a idiosyncratic

dynamic but longer-term we do think

they're still upside in housing we walk

throughout this in our housing dreams

presentation earlier in the week if you

think about the long term and we

highlight these these kind of top-down

dynamics re currently but a few things

to keep in mind so if you're looking at

new home sales if you're looking at

housing starts new construction activity

more broadly we're still relatively

depressed on a historical basis if you

look at residential construction as a

percentage of GDP we're only just above

what we've observed as trough lévesque

levels historically and that's inclusive

of six years of gains so we do think

there's upside the housing cycles tend

to be long and or Auto correlated you

run from trough to peak and peak to

trough and the other you know this is

kind of simple but I think it's

important is that you got to remember a

couple things the housing recovery

started almost a full three years after

the larger economic recovery so you've

had this lagged inflection in housing

trends so housing is typically if you

look at new construction activity it's

typically a mid cycle phenomenon

and that's that's pretty consistent

historically across cycles except in the

current instance so whereas the the

broader economy is kind of later-stage

here the housing cycle itself is more

mid stage and then we also had you know

a very tight underwriting standards

post-crisis so you know you're not gonna

have a default wave like you saw in the

last crisis and we think if we do go

into recession you don't want to be long

builders and housing stocks into a

recession but on the other side of that

we think we do think it's a buying

opportunity we think how housing stocks

fare in what would be a recessionary or

even if it's a shallow recessionary

environment domestically it looks a lot

more like you know the year 2000 2001 in

terms of how the housing stocks respond

versus anything like what we saw in 2007

2008 2009

you