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IPO Fever Catching on with Housing Market

by Peter Thomas Ricci

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IPO fever is sweeping through the housing market, with more and more investors liking the prospects of the embattled industry as it continues to recover.

Things have been looking up for the housing market heading into 2013, and we’re not just saying that because shadow inventory is falling, home sales at their highest mark in years and consumer confidence in the housing market is rising. Now, yet another reason, as the Wall Street Journal points out: the housing market’s biggest endorser, as of late, has been the stock market.

IPOs Abound for Housing Market in 2012-2013

As Chris Dieterich reports for the Journal, financial encouragement from Wall Street has targeted a number of sectors in the housing market:

  • For homebuilding, two homebuilders – Taylor Morrison Home Corp. and TRI Pointe Homes Inc. – filed for IPOs with the Securities and Exchange Commission in December, the first homebuilder IPOs since 2004; meanwhile, shares for Lennar Corp. have doubled, while D.R. Horton’s shares are up 60 percent. Shares for PulteGroup, meanwhile, have tripled in the last year, making it the highest-performing stock in the S&P 500.
  • Also relating to homebuilding, Boise Cascade, a plywood maker, filed for a $200-million IPO in November.
  • The tech aspects of the housing market have also been very popular with investors. Shares for Trulia leapt up 41 percent after the online syndication site went public back in September (and that was a year after Zillow’s hugely impressive IPO), while Realogy’s imposing $1 billion IPO went on without a hitch the following month, and stocks in the giant corporation have since risen more than 21 percent.
  • And as if that weren’t enough, Dieterich also points out that additional homebuilders, such as Meritage Homes, Beazer Homes and Standard Pacific, conducted follow-on offerings to raise additional revenue, and walked away in 2012 with a cool $449 million in new funds, making it the most active year of follow-ons since 2008.

Renewed Interest in the Housing Market

This all communicates one central point – from numerous angles (the press, consumers, investors), optimism is beginning to take hold in the housing market, and as Frank Maturo, vice chairman for equity capital markets at Bank of America Merrill Lynch, explained to the Journal, we should see even more investment, given the considerable room housing has for future growth.

“We’re coming out of the doldrums and depths of the real-estate crisis, and there’s a long runway ahead in the housing-related sectors,” he said.

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