As the supply of existing homes continues to shrink, home builders are barely keeping up with the skyrocketing demand in the housing market. New orders keep piling up.
As a result, the stocks of big builders have been steadily ballooning, up nearly 54 percent from a year ago. Many house builders have experience enough growth to revert the past years bad fate and now are going public.
Taylor Morrison, a Scottsdale, Arizona-based home builder, will make its initial public offering (IPO) Wednesday, according to filings with the Securities and Exchange Commission. It plans to sell 23.8 million Class A shares for between $20 and $22 a share. That would make the deal worth as much as $524 million. Taylor Morrison follows California-based Tripoint, which went public in January of this year.
Taylor Morrison, which builds in Arizona, California, Colorado, Florida and Texas, is a step-up builder. Prices for its homes average
Alex Barron, an analyst with the Texas-based Housing Research Center, said: "Unlike TPH [Tripoint], this is not a startup, and it already has a substantial land pipeline. It has significant momentum already in orders and backlog, and we think will do very well."
A firm advocate of the idea that there's still plenty of room to grow, Barron is putting a Buy rating on the stock, which will start trading on the New York Stock Exchange under the ticker symbol TMHC.
"We are pretty much in the second year of what should be a multi-year recovery, and I think that that company seems positioned in some of the more attractive markets," he noted.
Barron expects Taylor Morrison's revenues to grow 50-60 percent this year. "The pricing that they are quoting $20-22 a share seems decent price, where I think there should be upside for investors who participate."
However, all that glitters is not gold. A new survey conducted by the National Association of Realtors revealed that: "Despite multi-billion dollar buying sprees by well-funded Wall Street hedge funds, real estate investors bought fewer properties in 2012 than they did in 2011, which was a record year for investors. Investment-home sales declined 2.1 percent to 1.21 million from 1.23 million in 2011, but those sales had been well under a million during the market downturn."
