Tuesday, December 18, 2012

Robert Toll: Home Prices to Jump 20% Next Year, 25% to 30% in 2014

I first heard Bob Toll speak at a Michael Milken Conference in Beverly Hills, CA. It was early 2007 and it was the first time I had heard anyone publicly speak about the slowing housing market, especially the sub-prime market. He rattled off city after city, where sales were slowing. He nailed it.

Toll was early on in detecting the problem because his firm, Toll Brothers, is one of the largest home builders in the country. The firm is currently building in 20 states: Arizona, California, Colorado, Connecticut, Delaware, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Texas, Virginia, and Washington.

That's why it is significant when he sees a turn in the market. It comes from first hand knowledge across a spectrum of local markets.

In an interview with Reuters Impact Players host Robert Wolf, Toll says that home prices are about to rebound significantly, climbing 20% next year and another 25-30% in 2014. His top pick when he’s looking to build? New York City.

Indeed, if Bernanke keeps pumping money the way he is, Toll's forecast might be seen in retrospect as too conservative

9 comments:

  1. Sure, TOL must be brilliant: the stock went from $60 at housing peak, to $15 earlier this year.

    Why pay any attention to their very bias predictions of housing prices going higher?

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  2. What part of, "I was at the Milken Conference and personally heard him be among the first to warn of the developing housing crisis," do you not understand? Should you have not paid attention to his warning back then? Biased? Try informed.

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  3. While many people do have the memory of a fish, Robert Toll seems to think people are trout rather than salmon.

    >What part of, "I was at the Milken Conference and personally heard him be among the first to warn of the developing housing crisis," do you not understand? Should you have not paid attention to his warning back then? Biased? Try informed.

    What part of "past predictive success does not imply future predictive success" don't you understand?

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  4. That's a doubling of housing prices in 3 years. That's like a hardway bet in craps if you buy TOL.

    Might be worth the gamble if TOL's shares have been beaten down like they have. They have an 11 P/E ratio on their shares. Might be talking his book, but it's hard to ignore.

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  5. I wonder if Bernanke would go on a structured Fed buying spree of Jack Russel Terriers. Then I could start really breeding and selling mine into a Fed funded mountain of cash. Then when Fed funds are infused and extracted, what next? Wait for more Fed cash? Ben's banks will get to take possession of some of the JRTs that buyers could not keep up payments on SINCE outsourcing and oil profiteering is also tax/dereg favored. Oh well, the JRT market will be left flat until another Fed flood comes along. Enjoy the dogs until then Ben Inc. Anyone interested in "garbage mtg bonds" that turn into gold once the Fed buys them in a steady feeding frenzy, that would blow out any market AWAY from affordability?

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  6. I dont know about NYC. Housing prices havnt fallen that much here since 06. They are still overvalued in my view living here in NYC. I dont see how he could like NYC

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    1. He knows that in NYC, supply is artificially constrained while demand remains high. As long as the supply of monopoly money--a good deal of which flows first through NYC--keeps increasing, a drop in housing and rental prices is unlikely (even if the market appears to be overvalued).

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  7. Bob,

    Do you think we're going to see interest rates begin climbing w/ these price increases economy-wide, too, or how do you see that aspect playing out?

    Is this the endgame?

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    1. It's not the endgame, but interest rates will climb. I don't think we are anywhere close to an endgame, where the totalitarian state collapses.

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