HomebuilderStocks.com, a global investor and industry news portal for the homebuilder sector, reviews the strong performance of multifamily housing stocks fuelled in large part by strong market fundamentals. Multifamily residential market participants such as fire-resistant building materials manufacturer International Barrier Technology, Inc. (OTCBB: IBTGF; TSXV:IBH), are positioned to benefit from what many predict to be long-term growth.
Despite some downturn, home builders are seeing renewed investor interest such as the recent report from Bill Gates that his charitable foundation has made investments in seven of the nation’s largest home-building companies. Among the list was WCI Communities Inc., a premier builder of luxury communities and condominiums that has seen its stock price rise $2.45 since the beginning of November, to its current price of $18.20.
Evidence of the success of multifamily housing stocks has been demonstrated by the surging performance of the National Association of Home Builders Multifamily Stock Index (MFSI) that has risen approximately 264% since 1998, beating the S&P 500 by over 237%.
The MSFI tracks the stocks of 24 publicly-traded firms, consisting of 20 Real Estate Investment Trusts (REITs) whose principal business involves activities within multifamily housing. Some notable performers over the past 12 months have been REITs such as Associated Estates Realty Corp up $5.51 or 61%, United Dominion Realty Trust with a stock price appreciation of $9.85 and BNP Residential Properties, Inc. realizing a $9.44 gain, up over 64% to its recent close of $24.05.
The cause for the continued strength of the multifamily building market has been attributed to a variety of key factors. Initially the market received a boost from a period of low interest rates, which propelled success across the entire housing market for several years. Following on the heels of a low interest rate environment was an increased flow of private equity into the sector that continued to push prices even higher.
Elliot Eisenberg, PhD., a housing policy economist with the National Association of Home Builders explains, “It has been a remarkably good industry to have been an investor in over the last 7-8 years. There have been a series of factors, one after the other, that have collectively propelled this market consistently forward and to new highs. The low interest rate environment propelled house prices upwards – single family, and with this came multifamily. As this story was unwinding a new driver materialized, which is the rise in private capital. There was an increased interest in leveraged buyouts. This is now helping to raise prices in that space. There are more available pools of private equity because the stock market returns have not been very good; REITs and multifamily residences are the immediate beneficiaries of this.”
In addition, multifamily has enjoyed strong market fundamentals over the past 12-18 months, which continue to fuel the sector. “Vacancy rates for rental properties are going down, absorption rates are going up, asking rents are going up. All of the positives expected to happen when prices are rising continue to occur in this market,” states Eisenberg.
Dr. Michael Huddy, Chief Executive Officer of International Barrier Technology, Inc. (OTCBB: IBTGF; TSXV:IBH), sees demographics as a key factor behind multifamily residential market growth. “There is a big segment of people such as many first time homebuyers and baby boomers as they begin to retire that are looking to move into homes that do not require a lot of maintenance. Feeding this are the bigger track home builders that are beginning to design much nicer and more upscale multifamily homes and developments to cater to these demographic segments.”
“Overall the sector is being driven by the fact that there is going to be a lot more people living in the United States in the next thirty years requiring 70 million new homes, so a big percentage of that is going to be the first time homebuyer who may be interested in the multifamily marketplace and also couples moving into homes as a second home or retirement,” adds Huddy.
As a developer and manufacturer of environmentally friendly fire-resistant building materials, Barrier has been able to take advantage of the continued strength of the multifamily market with recent sales figures showing monthly sales revenue for October increasing 56% from the same period last year, with volumes into the multifamily residential roof deck market representing 62% of total sales.
Dr. Huddy explains, “Multifamily residential construction has more stringent fire code requirements than single family residences so our primary residential market is multifamily. As a result, any factor that helps to improve the multifamily segment directly helps us. Even if housing starts are down in total, as long as multifamily starts are strong it bodes well for us because we have a number of code approved applications and code required applications for multifamily buildings.”
Looking forward, unless interest rates rise dramatically, continued strength is expected within the multifamily housing market. “Trends look positive and market fundamentals look as though they will remain healthy for quite some time,” describes Eisenberg.
International Barrier Technology, Inc. (IBTGF: OTCBB; TSXV: IBH), developer and manufacturer of proprietary fire-resistant building materials branded as Blazeguard®, is a featured company on HomebuilderStocks.com, an investor and industry news portal for the homebuilding sector within the InvestorIdeas.com™ content umbrella. InvestorIdeas.com™ does not make recommendations but offers investors research, news, blogs, RSS Feeds, online conferences, interviews and links to public companies within the homebuilding sector.
International Barrier Technology, Inc. compensates InvestorIdeas.com™; see disclaimer below.
To read more on International Barrier Technology, Inc. (IBTGF: OTCBB; TSXV: IBH) visit the Company’s website intlbarrier.com
Our sites do not make recommendations, but offer information portals to research news, articles, stock lists and recent research. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. We attempt to research thoroughly, but we offer no guarantees as to the accuracy of information presented. All information relating to featured companies is sourced from public documents and/ or the company and is not the opinion of our websites. This site is currently compensated by its "featured companies." International Barrier Technology, Inc. (OTCBB: IBTGF) currently pays three thousand per month and 100,000 options.
For more information contact:
Dawn Van Zant 800.665.0411
Source: HomebuilderStocks.com, International Barrier Technology, Inc.