Morningstar Advisor - October/November 2013 - (Page 30)

Sector Rap Take a Guarded Approach to Homebuilders By Basili Alukos Yes, the sector is on the upswing, but the market has already priced in a rebound. For much of the past decade, the housing sector has dominated the economic news. There was the run-up in prices from 2002 until 2007, resulting in rampant house flipping and a bubble. The bubble burst in 2008, causing a worldwide financial crisis. For much of the time since, housing has been a drag on the economy, as ruined credit and high unemployment killed demand. Over the past 12 months, however, optimism in the sector has 30 Morningstar Advisor October/November 2013 risen, and home building and housing-related stocks have rallied. Has the housing sector turned the corner? To find out, I sat down with Morningstar industrials analyst James Krapfel. Our discussion took place Aug. 13. Basili Alukos: I’d like first to lay a foundation for where we’re at in the sector. How do you judge the health of the market? James Krapfel: We look at the new-home sales market, which includes single-family sales as reported by the U.S. Census Bureau, and our estimate of multifamily sales, because of its direct impact on the homebuilders that we cover. From 1964 to 2001, industry cycles were relatively modest in amplitude. Average new-home sales were 746,000 per year during that period.

Table of Contents for the Digital Edition of Morningstar Advisor - October/November 2013

Morningstar Advisor - October/November 2013
Contents
Contributors
Letter From the Editor
How to Make Social Media Work for You
Do Mutual Funds Still Have a Role?
More Personal Than Finance
How to Handle Your TIPS Positions
A Real Estate Veteran Starts From Scratch
Investments á la Carte
Investment Briefs
When to Say No
Take a Guarded Approach to Homebuilders
Fund Distribution Has Been Turned on Its Head. Now What?
Winning the Distribution Battle
Active ETFs Wait for Their Heyday
A Fund Firm Defies Indexing Trend
Piloting New Channels
A Good Fit
The Predictive Power of Fair Value Estimates
Does Being Prudent Pay Off?
Utilizing Utilities’ Total Return
Stuck in the Middle Is Not a Bad Place to Be
Our Favorite Mutual Funds
50 Most-Popular Equity ETFs
Undervalued Stocks With Wide Moats
The Good Guys Win

Morningstar Advisor - October/November 2013

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