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Semper Capital Management, L.P. on 2021 Housing Fundamentals

by Semper Capital, on Mar 10, 2021

Housing has continued to be a pillar of the U.S. economy, far outperforming expectations throughout 2020, with impressive and growing demand for shelter. The strong demand for housing combined with low mortgage rates and forbearance programs and foreclosure moratoriums during the pandemic have led to a sharp supply/demand imbalance.
We are seeing strong housing fundamentals:

  • Positive home price growth is expected to continue in 2021, with home prices nationally now 10.5% higher than a year ago through December according to Case Shiller, and the expectation is for price appreciation to remain positive in 2021 with Wall Street research analysts projecting an average base case HPA over 3% for the year (based on an average of projections from Morgan Stanley, Nomura, Citi, BAML, Goldman Sachs, and JPM)
  • Historically low housing supply – currently under 3 months versus an historical norm of more than double that amount - and continued strong demand at levels last seen prior to the Great Financial Crisis (GFC)
  • Housing construction has remained well below pre-GFC levels, further limiting supply
  • Demand is being fueled by a longer-term demographic shift toward higher household formation rates, attractive home affordability driven by historically low mortgage rates, and a pandemic-led change in housing preferences nationally



Opinions expressed in this document represent the views of Semper Capital Management, L.P., are valid only as of the date indicated, and are subject to change without notice. There can be no guarantee that any of the opinions expressed in this document or any underlying position will be maintained at the time of this presentation or thereafter. We are not soliciting or recommending any action based on this material.  The information contained herein has been prepared solely for informational purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any securities.

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