US housing investors to gain from GFC over next five years

Quay Global Investors Chris Bedingfield

27 January 2022
| By Liam Cormican |
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Investors can capitalise on the effects of the Global Financial Crisis (GFC) on the US housing construction industry as the market will continue to tighten over the next five years, according to Quay Global Investors.

Speaking to Money Management, Chris Bedingfield, portfolio manager of Quay Global Real Estate fund, said the demand-supply housing imbalance triggered by the GFC was expected to drive returns for the fund’s apartment and single-family housing exposure.

He said there was still a general undersupply of housing which had not recovered in over a decade.

“The number of homes – single-family homes in particular – that are being built today are still below what they were during the run up of the housing cycle back [pre GFC],” Bedingfield said.

Bedingfield highlighted the effect that the financial crisis had on the construction industry, with many workers exiting the industry compounded by a failure to attract new entrants.

“That's created a 10-year legacy because new entrants into the industry, apprentices if you will, that would have started in 2010, 2011, and 2000, [would be] senior builders now. And of course, they didn't start back then because the industry was garrotted,” he said.

“So, there is a lack of people and lack of real resources that's available to actually meet the demand side of the equation.”

Bedingfield said the number of houses built in the US each year had gone from 1.6 million at the peak of the GFC to about 900,000 homes today.

He said the US used to produce 1.2 million homes per annum prior to the peak of the GFC.

Bedingfield noted his fund’s exposure to apartment and single-family housing would benefit from an expected exodus of young adults leaving their parents’ homes.

According to Bedingfield, the number of 18 to 34-year-old Americans living at home with their parents had gone from below 10% before the GFC to almost 18%.

“What's happening now is they’ve got money in their pocket with the stimulus, jobs being available and wages going up,” he said.

“Demand is surging, and supply is struggling to keep up and so that's a great story [for investors], it's going to last a while.”

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