LGIH: CC comments from WFC

A few interesting comments from the Well’s Fargo conference call about housing and oil:

Inventories of homes for sale remain historically low, providing a tailwind for building activity into 2016. Commercial real estate appreciation has been even stronger than consumer real estate and vacancy rates for nearly all property types continue to decline. For apartments, vacancy rates are at historic lows which should benefit both construction activity and pricing in 2016.

and

our outlook for housing in 2016 is actually pretty strong. We’ve got a little bit more supply coming in. You’ve got more household formation. We’re going to have a four handle on unemployment before you know it and we’ve got low rates. So if that continues to be true, that’s probably a continued tailwind, in terms of some of the drivers of the estimation of embedded loss on the consumer real estate side of the loan portfolio. And without putting a number on it, because you only know it when you get there, I think that’s supportive.

and

I was with a large builder in the Texas market not long ago. And they were talking about the fact that some of what’s happening in oil and gas in the field services is making cement more available and workers and so forth that are important to housing.

and

And it might surprise you that places like Houston, because of their relative diversity of their overall economy are actually performing relatively stronger than some counties that represent other basins in the Dakotas, in the West, etcetera. But we really haven’t seen any second order big impact yet among any of them, in terms of our balance sheet exposure and we’re on the lookout.

Neil

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