Economist: A Sign the Market Isn’t in Free Fall
As have most online pundits, economist Scott Grannis, a contributor to investor website Seeking Alpha, has probably grown accustomed to snarky comments from readers when he presents a contrarian perspective, particularly if it includes what they perceive to be an overly sanguine outlook on a sector as battered as the housing market.
But he does it anyway. In a September 3 post to his “Califla Beach Pundit” commentary page on Seeking Alpha, Grannis pointed to evidence – a slight increase, since mid-August, in the Mortgage Bankers Association Purchase (MBAVPRCH) index, which tracks mortgage purchase applications – that, he says, suggests the housing market is at least not in free fall, that its recent weakness could prove to have been a temporary lull, and that “the dreaded double-dip recession is not unfolding.”
These observations drew darts from readers who accused Grannis of not properly factoring in other market realities, including the 12 months of inventory currently weighing on sales prospects and prices. Another reality, though, is that it is better to have mortgage-purchase applications on the rise than not. If the index increases continue, even in the face of tight credit, they can help sustain the pace of sales and help keep prices from plummeting wildly.
A big buyer for a big supplier
Residential building products manufacturer and distributor Associated Materials announced last week that it is being acquired by affiliates of Hellman & Friedman, a San Francisco-based investment firm, for about $1.3 billion. The deal is expected to close before the end of the year.
Founded in 1984, Hellman & Friedman has invested in a variety of businesses that are established but also show potential for solid growth. Hellman & Friedman investment targets have ranged from financial services to software and digital media firms to insurance, health care, marketing, and energy specialists.
The acquisition of Associated Materials, whose current majority owners are affiliated with two other investment firms, Investcorp and Harvest Partners, is not only a bet on the revival of residential construction but also on the company’s distribution network and product line, which includes vinyl windows, siding, fencing, and railings, as well as aluminum trim coil, and aluminum and steel siding and accessories.