Pay Attention to the 'YIMBY' Movement

With the Federal Reserve hiking interest rates, real estate is hated right now. And that isn't the only reason for the sector's current uphill battle. As we discussed last Wednesday, other factors are making homes too expensive for many people. [Chaikin PowerFeed]( Pay Attention to the 'YIMBY' Movement By Marc Gerstein, director of research, Chaikin Analytics With the Federal Reserve hiking interest rates, [real estate is hated right now](. And that isn't the only reason for the sector's current uphill battle. [As we discussed last Wednesday]( other factors are making homes too expensive for many people. One of the main catalysts is that the U.S. continues to suffer from a housing shortage... A 2021 report from the Federal Home Loan Mortgage Corporation said the country was short 3.8 million homes in the prior year. In 2018, the shortage was "only" 2.5 million. The homebuying frenzy in the wake of the COVID-19 pandemic didn't help either. And even with the market cooling off in recent months, a simple fact is clear... America still needs a lot more homes. Now, several reasons for this shortage are widely discussed... Construction costs are high. Supply chains are erratic. And after the 2008 crash, many homebuilders failed and about 1.5 million workers left the industry. But investors are largely ignoring another set of growing issues in the housing sector. These issues are hot in real estate and political circles. And they're exacerbating the shortage. Today, we'll tackle why they could be critical for a reversal in the real estate space... Recommended Links: ['Here's the EXACT Day To Sell Your Stocks']( He got notice of the March 2020 crash a week in advance. And he received an alert saying stocks would enter a bear market, weeks before stocks fell over 20% earlier this year. But now, this expert says it's time to prepare for another extraordinary shift in the markets. And timing it correctly could be the most important move of your financial life. [Click here to ensure you aren't blindsided](. [Oil Expert Quietly Predicts MASSIVE Market Event]( It's the top-performing sector of the year, yet most investors are completely ignoring it. And now, one company trading for less than $20 per share could be at center of it all... set up to profit big time for what may be the biggest boom in the oil industry's 163-year history. [Here's the No. 1 step to take today](. In short, I'm referring to "zoning." Zoning-type rules date back to ancient times. They separated incompatible land uses like waste disposal and religious observance. And they kept poor people away from the elite. Los Angeles adapted the first land-use restrictions in the U.S. in 1904. And a little more than a decade later, New York City adopted the first citywide zoning regulations. Over the past century, zoning laws have become far more complex... For example, zoning laws often mandate building single-family homes on large lots. Some require a minimum number of parking spaces for a development. Other ordinances restrict attached or multifamily housing to certain areas. The "NIMBY" ("Not in My Backyard") crowd favors strict zoning laws. They oppose variances, object to expanded infrastructure, and so forth. NIMBYs consider zoning laws to be critical to preserving neighborhoods. The idea is that they will keep existing homes desirable. And for these folks, that's most important. However, there's a problem... The more undeveloped acreage, the fewer homes a developer can build and sell. So in other words... strict zoning laws are fueling the housing shortage in America. Consistent with basic economic principles, supply shortages mean higher prices. That brings us to the "YIMBY" ("Yes in My Backyard") crowd. It's a newer label. And as you've probably guessed, it refers to the opposite side of the argument... The YIMBY crowd is pro-development. These folks don't think housing should be restricted. And importantly, they believe the way to solve the housing shortage is through density. By that, I mean the YIMBY crowd believes we need more homes per acre. They reason that it will allow supply to catch up with demand. And that will make prices more affordable. What does that mean for us as investors? Fortunately, a few stocks can help us monitor the YIMBY crowd's efforts... Skyline Champion (SKY) and Cavco Industries (CVCO) are a certain kind of homebuilder. Both companies produce super-affordable manufactured homes. And if you're interested in the future of housing, consider adding Century Communities (CCS) to your watch list. It's starting to build with 3D-printing and robotics technologies. These three companies are all unacceptable to the NIMBY crowd. The homes they build – and the customers they target – aren't compatible with low-density development. So as investors, we want to look for signs of life from these three companies. The Power Gauge's Technicals and Experts categories would likely react the earliest. That can only happen if these companies find more sites on which to build their homes. Seeing these companies flourish would signal YIMBY progress. That would be good for these companies, of course. But more importantly, it would signal a growing opportunity for the real estate sector as a whole... YIMBY progress would mean increased supply. That would help fix the U.S. housing shortage. And of course, it would be a boon for all the companies building those homes. That's why I'm keeping a close eye on these three companies in particular. They're my leading indicator in the single-family housing market. Keep your eyes on them today. Good investing, Marc Gerstein Market View Major Indexes and Notable Sectors # Hld: Bullish Neutral Bearish Dow 30 +2.61% 0 24 6 S&P 500 +2.63% 28 349 120 Nasdaq +2.35% 6 66 28 Small Caps +2.72% 251 1111 498 Bonds +1.59% Energy +5.65% 2 17 2 — According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks are Bearish. Major indexes are mixed. * * * * Top Movers Gainers [rating] MRO +10.58% [rating] APA +9.10% [rating] DVN +8.65% [rating] FANG +7.52% [rating] COP +7.46% Losers [rating] TSLA -8.62% [rating] TWTR -2.83% [rating] EMBC -2.05% [rating] ILMN -1.86% [rating] BIIB -1.01% * * * * Earnings Report Reporting Today Rating Before Open After Close AYI No earnings reporting today. Earnings Surprises No significant Earnings Surprises in the Russell 3000. * * * * Sector Tracker Sector movement over the last 5 days Energy +10.68% Materials +4.31% Financial +2.09% Communication +1.90% Industrials +1.76% Health Care +1.68% Real Estate +0.77% Information Technology -0.34% Staples -2.23% Discretionary -2.40% Utilities -3.50% * * * * Industry Focus Oil & Gas Exploration & Production Services 12 45 2 Over the past 6 months, the Oil & Gas Exploration & Production subsector (XOP) has outperformed the S&P 500 by +13.50%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #1 of 21 subsectors and has moved up 7 slots over the past week. Top Stocks [rating] PBF PBF Energy Inc. [rating] DK Delek US Holdings, I [rating] MPC Marathon Petroleum C * * * * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, [click here](. You’re receiving this e-mail at {EMAIL}. For questions about your account or to speak with customer service, call [+1 (877) 697-6783 (U.S.)](tel:18776976783), 9 a.m. - 5 p.m. Eastern time or e-mail info@chaikinanalytics.com. Please note: The law prohibits us from giving personalized investment advice. © 2022 Chaikin Analytics, LLC. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Chaikin Analytics, LLC. 201 King Of Prussia Rd., Suite 650, Radnor, PA 19087. [www.chaikinanalytics.com.]( Any brokers mentioned constitute a partial list of available brokers and is for your information only. Chaikin Analytics, LLC, does not recommend or endorse any brokers, dealers, or investment advisors. Chaikin Analytics forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees of Chaikin Analytics, LLC (and affiliated companies) must wait 24 hours after an investment recommendation is published online – or 72 hours after a direct mail publication is sent – before acting on that recommendation. This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.