Why a Deep Housing Recession is Inevitable

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Toll Brothers ($NYSE:TOL) is a publicly-traded company that specializes in the development and sale of luxury homes. There are many articles stating that Toll Brothers has what it takes to face the housing recession that most know is coming or has even already arrived. Why a deep housing recession is inevitable escapes no one. Housing prices are at historic highs, yet this time they face mortgage rates which are also at very high levels, not just compared to recent memory, but also looking back 2 decades. In order to combat this, Toll Brothers has been focused on creating innovative designs and amenities that will appeal to luxury homebuyers.

The company has also been investing in land development and acquisitions in order to position itself for future growth. While the future is always uncertain, it seems that Toll Brothers is taking the necessary steps to weather the storm and come out ahead. Only time will tell how deep the housing recession will be, but Toll Brothers seems poised to weather the storm.

Stock Price

The average American consumer is feeling the effects of the coronavirus pandemic in a variety of ways. The most significant way is through job losses and furloughs, which lead to a decrease in spending. This decrease in spending is causing a ripple effect throughout the economy, and one of the hardest-hit industries is housing. The housing market was already beginning to cool off before the pandemic hit, and now it is facing an even sharper decline. This is due to a combination of factors, including the fact that people are not moving as much, builders are not starting as many new projects, and potential buyers are having a harder time getting financing. This will have a negative impact on the economy as a whole, as housing is a major driver of growth. It will also put even more pressure on already struggling families who are struggling to make ends meet. The only silver lining in this situation is that interest rates are at historic lows, which may help to cushion the blow somewhat.

However, it is still going to be a tough road ahead for the housing market.

VI Analysis

Company’s fundamentals reflect its long term potential, below analysis on TOLL BROTHERS are made simple by VI app. VI Star Chart shows that TOLL BROTHERS has a high health score of 8/10 considering its cashflows and debt, is capable to pay off debt and fund future operations. TOLL BROTHERS is classified as ‘cheetah’, a type of company that achieved high revenue or earnings growth but is considered less stable due to lower profitability. What type of investors may interested in such company.

TOLL BROTHERS is strong in asset, dividend, growth, and medium in profitability. Cheetah companies are usually of interest to growth investors, who are willing to sacrifice some stability for the potential of higher returns. These companies tend to have higher beta values, meaning they are more volatile than the market as a whole.

VI Peers

The company is headquartered in Horsham, Pennsylvania, and operates in 22 states. The company’s product offerings include single-family detached homes, attached homes, and condominiums. The company’s competitors include D.R. Horton Inc, Redbubble Ltd, and PulteGroup Inc.

– D.R. Horton Inc ($NYSE:DHI)

D.R. Horton Inc is a homebuilding company that was founded in 1978 and is headquartered in Fort Worth, Texas. As of 2022, the company had a market capitalization of 28.86 billion and a return on equity of 25.26%. The company operates in 26 states and 84 markets across the United States. D.R. Horton is the largest homebuilder in the United States by volume, with a market share of approximately 18%. The company builds single-family detached homes, townhomes, and condominiums.

– Redbubble Ltd ($ASX:RBL)

Redbubble Ltd has a market cap of 168.95M as of 2022 and a Return on Equity of -12.32%. The company is an online marketplace that allows artists to sell their artwork on a variety of products.

– PulteGroup Inc ($NYSE:PHM)

PulteGroup Inc is one of the largest homebuilders in the United States. The company has a market cap of 9.97 billion as of 2022 and a return on equity of 24.61%. The company builds and sells single-family homes, townhouses, condominiums, and apartments in the United States.

Summary

Investing in Toll Brothers could be a smart move during a housing market downturn. The company is one of the largest homebuilders in the United States, and it has a reputation for building high-quality homes. While other homebuilders may be cutting back on construction during a downturn, Toll Brothers is likely to continue building homes, which could help it weather the storm. Toll Brothers also has a strong financial position, with a strong balance sheet and plenty of cash on hand. This could help the company weather any potential storms that come its way. Of course, there are risks to investing in any company, and Toll Brothers is no exception. The company’s stock could decline if the housing market experiences a prolonged downturn.

However, if you’re looking for a company that could weather a housing market downturn, Toll Brothers is worth considering.