Hello EP, I think there is a natural limit to consolidation in the home building industry, because:
(a) the need for large tract of housing built on giant swaths of land can only be so much,
(b) such land invariably involve longer and longer commute needing more and more time/gas,
(c) to fill such space, must have buyers with equity, and willingness to make the move to ever further distances
(d) such new 'near cities', to be sustained, require nearby industry and commerce, new or relocated
(e) the jobs picture, affordability collage, and interest rate book all are playing against such type of housing
(f) the little guys build on odd lots and one-off plots, and they cannot be consolidated, because they will cut price of labour at the bitter end; and for the same reason that the corner greasy spoon restaurant will not be consolidated away
So, no, housing shares cannot go up forever, and I doubt for long. They will fall just like everything else will, each taking its turn.
We must be patient, and be in measured steps, gently edge toward the defining moment, contemplate at the precipice of the event horizon, and get ready to marvel at the previously unimaginable.
My hedge, if one could call it that, is should the US housing shares continue to tear up, and my much large positions in physical real estate and shares in emerging market equity and pieces of CanRoy should do at least equally well. And if the US housing shares do not continue to tear up, the next move is ... well, down.
I may need to short other types of goodies, to balance matters and anti-matters, and see what spontaneously generates.
Chugs, Jay |
