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Analysts Ivy Zelman and John Burns have been analyzing the U.S. single-family housing market for decades, and they are among the best.  Click here for some excellent insights from them about why the housing market is not overheating.  

Check this out for a very good, concise overview of the real estate investment market by Stuart Eisenberg, head of BDO’s real estate practice.

Per this article, private equity is flowing heavily into real estate funds again.  Investors missed the sky-high returns – we’re talking 50%, sometimes over 100%, IRRs – they would have harvested if they bought anywhere near the bottom in 2009 and 2010, but it’s a meaningful statement about the health of real estate for the next couple of years.  And good for the economy.  Just keep your eye open for the ridiculous cap rates of 2005 and 2006, and short, short, short!   

Not terribly surprising that it occurred, but more how quickly we reached this point.  With the relative shutdown in new home production since the crash, and only recent resurgence of homebuilding, the U.S. is fast approaching a “sold out” situation.  Obviously, this has broad implications socially, but economically, there are clearly investment plays forming. Our sources tell us private equity is gearing up to depl0y some its dry powder, a lot of which has to find a home before 2014, in these plays.

We are back in the homebuilding finance and advisory business!  In the 1990s, my team at Montgomery Securities built the top-ranked franchise on Wall Street for financing homebuilders and handling their M&A and other advisory needs.  We advised KB Home, Del Webb, Schuler Homes, DR Horton, to name a few single-family builders, as well as a number of manufactured home producers and community developers.  The past few years, of course, virtually no homebuilder was building enterprise value.  Homebuilders were just trying to stay alive.  With the homebuilding market coming back, and solid prospects for rebuilding enterprise value, homebuilders are needing strategic advice, CAPITAL, and M&A advice.  See this.  We are here to help. www.traversi.com 

The crowdfunding allowed by the JOBS Act of 2012 is getting a lot of attention, but we have yet to hear from the SEC and FINRA on how they are going to regulate it.  The details of that will spell doom or boom for crowdfunding.  In any event, the dollar limit ($1 million in any 12-month period) makes it kind of uninteresting from an investment banking standpoint.

As investment bankers, we like the element of the Act that waives the prohibition against general solicitations for Reg D private placements, provided the deal is ultimately funded with accredited investors.

This article on real estate and crowdfunding provokes ideas about how interests in capital assets might be bought, sold, and traded among accredited investors in the private markets:   http://www.businessweek.com/articles/2013-01-24/crowdfunding-for-real-estate-buy-a-slice-of-a-skyscraper.   

More on crowdfunding as regulatory issues are clarified.


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