NEW YORK – When it comes to the U.S. housing market, James Stack could be forgiven for thinking he’s a seer.
Like other investors, Stack, who manages $1.3 billion for people with a high net worth, watched housing stocks surge last year. An S&P index of homebuilders jumped 75 percent, about four times as much as the stock market as a whole, as home prices kept rising.
Unlike most other investors, Stack – who predicted the housing crash in 2005, just before prices reached their peak – recently said people “don’t want to hear talk” about housing prices “being a little bit bubblish” and suggested “it is 2005 all over again in terms of the valuation extreme, the psychological excess and the denial.”
Next thing you know, the homebuilder stocks have their worst seven-day run since February 2016.
It’s probably just profit-taking in one of the market’s hottest sectors, along with some investor concern about rising mortgage rates, said Brian Lazorishak, senior portfolio manager for Stack Financial Management.
“It does look a little more serious than anything we’ve seen in a while, but it’s too soon to pass much judgment,” Lazorishak said.
He called the timing “kind of funny.”
