Next Wave Of Housing Demand…Renters

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Rental-Home Boom

“Davidson” submits:

[timeless]

Q2 hedge fund letters, conference, scoops etc

2yrs ago I sent a note about the imbalance in rental vs single family homes due to Dodd Frank policy. This will reverse if Jelena Williams, new Chairwoman FDIC, normalizes Dodd Frank mtg rules to let millennials to buy homes. I think this is going to occur which will mean a flood of new home owners as rental properties as a percentage of the whole falls. Those the rental market will correct and we will have an issue with defaults.

WSJ: Freddie Mac Joins Rental-Home Boom

The mortgage-finance firm is backing loans used to buy single-family rental houses https://www.wsj.com/articles/freddie-mac-joins-rental-home-boom-1534604401

This is an updated chart. Single-Family starts have grown with changes in government policies post-WWII. This chart shows the Percent of Multi-Family as a Percent of Single Family Starts which exaggerates the differences between the two categories. The Community Reinvestment Act 1995 pushed Multi-Family below 20% in 2005 as the Sub-Prime Crisis built to its peak in 2006. Dodd Frank’s restrictions on mtg lending resulted in an explosion in Multi-Family starts with access to mtg restricted reaching a peak of 70% in June 2016. With the current administration, it is apparent some regs have been eased and Single-Family starts are beginning to regain in importance. Hard to say where the level will settle out, but Single-Family is likely to be higher with millennials beginning families which culturally leads to suburban home ownership with private yards for children to play in. This is likely to hurt rental markets as this shift occurs.

Rental-Home Boom

Freddie Mac is coming in with lending along with the surge in investor confidence at the ‘top of the market’ in my opinion.

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Todd Sullivan is a Massachusetts-based value investor and a General Partner in Rand Strategic Partners. He looks for investments he believes are selling for a discount to their intrinsic value given their current situation and future prospects. He holds them until that value is realized or the fundamentals change in a way that no longer support his thesis. His blog features his various ideas and commentary and he updates readers on their progress in a timely fashion. His commentary has been seen in the online versions of the Wall St. Journal, New York Times, CNN Money, Business Week, Crain’s NY, Kiplingers and other publications. He has also appeared on Fox Business News & Fox News and is a RealMoney.com contributor. His commentary on Starbucks during 2008 was recently quoted by its Founder Howard Schultz in his recent book “Onward”. In 2011 he was asked to present an investment idea at Bill Ackman’s “Harbor Investment Conference”.

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