The Housing Puzzle: To Sell or Not to Sell... And Checking In on the SPAC Unwind

Talk to friends in almost any part of the country – certainly here in California – and the conversation goes something like this... "You won't believe what the house down the block sold for – and it needs to be totally gutted." "Yeah, can't believe it. We should sell." "We've thought the same thing, but […] Not rendering correctly? View this e-mail as a web page [here](. [Empire Financial Daily] The Housing Puzzle: To Sell or Not to Sell... And Checking In on the SPAC Unwind By Herb Greenberg Talk to friends in almost any part of the country – certainly here in California – and the conversation goes something like this... "You won't believe what the house down the block sold for – and it needs to be totally gutted." "Yeah, can't believe it. We should sell." "We've thought the same thing, but there's nowhere to go." If you've owned a house for even just a few years, there is no way you haven't given this at least a moment's thought. We all know that a house is a home, with underpinnings (if all goes well) as an appreciating investment... over time. But thanks to low rates, regardless of the location or what you originally thought you might have overpaid, housing is having its crypto (or worse, meme) moment... As a result, it's hard not to go through the exercise of whether it would be foolish to not sell. As much as I love my house and where I live, I had that very discussion via Twitter last week in a back-and-forth with Dominic Chu, my old desk-mate at CNBC, after he [tweeted this](...  Source: Twitter/@TheDomino Another old CNBC friend Sandy Cannold responded...  Source: Twitter/@SandyCannold That prompted Dom to shoot back...  Source: Twitter/@TheDomino To which I responded...  Source: Twitter/@herbgreenberg Dom then closed the loop, saying...  Source: Twitter/@TheDomino For perspective, here in San Diego the average price of housing recently topped $800,000... If you knew the housing stock here – and the nature of the housing stock – you would realize just how out of touch that is with reality. But it's not just here. As CNBC's Diana Olick reported last week... Anyone out there searching for a new place to live knows there is not much to buy. Total supply and new listings are at record lows, and that means that what is on the market now is selling fast. Really fast. The average home spent just 61 days on the market, according to a January reading from Realtor.com. That is the fastest pace Realtor.com has recorded since it began tracking the metric in 2016. It's 10 fewer days than at the rate recorded in January 2021 and 29 fewer than the 2017-20 pace. Therein lies the puzzle... sell or stay? And if you sell, where do you go? As rates rise, does inventory go higher? Or do things tighten even more? What I do know is that nobody knows, but everybody has an opinion. If you do, feel free to send your thoughts my way (you can send me an e-mail by [clicking here](mailto:feedback@empirefinancialresearch.com?subject=Feedback%20for%20Herb))... It might make a good follow up. --------------------------------------------------------------- Recommended Links: [The best case for gold, ever]( Gold could be on the verge of the biggest bull run in half a century. (It gained 1,700% during the high-inflation 1970s.) And Dan Ferris believes you MUST own shares of one extraordinary gold stock. He says it's likely better than any miner, explorer, or exchange-traded fund on Earth. It's the crown jewel of his complete plan for this dangerous market, with 1,500% potential. [Details here](. --------------------------------------------------------------- [Man who called AZO before it soared 6,900% makes shocking real estate prediction]( Whitney Tilson, who's appeared twice on 60 Minutes, has just dropped one of the biggest bombs of his career. He's predicting an abrupt end to the global real estate market. [Here's everything he's saying](. --------------------------------------------------------------- Meanwhile, there are differences of opinion about whether the stock market is currently a bubble, but there's one thing with little disagreement about... We're seeing a big unwind in special purpose acquisition companies ("SPACs"). My colleague Enrique Abeyta is fond of saying that SPACs are not an asset class. And they aren't, but they will go down as a poster child of this era's excesses... and the unwind is one for the books. As a refresher, SPACs (which are also known as "blank-check companies") are entities that are created to find a merger partner – it's an alternative to the traditional initial public offering ("IPO") route. If they don't find one in an allotted amount of time – usually two years – they have to return the money to investors. Right now, more than 500 companies are searching for mergers... But as [this story]( in Bloomberg details, even after they head to the altar, SPAC partners are increasingly getting cold feet... At least six mergers with special-purpose acquisition companies have been canceled this year, on pace for a record number of nixed deals in a single quarter. At least 22 have been spiked since the middle of 2021, according to data compiled by Chicago-based SPAC Research, which tracks the industry. That compares with 26 tie-ups that were called off in the more than five years prior, the data show. One reason, as I said in the [December 10 Empire Financial Daily]( is that another quirk of SPACs is that if investors don't like the deal, they can ask for their money back. And as Bloomberg reports, they're doing that in record numbers... The average redemption rate has steadily climbed to top 90% for deals in February, SPAC Research data show, compared with less than 10% a year ago. It's a classic example of investors beating Wall Street at its own game. That said, Enrique – who has plenty of expertise with the space – is still overall bullish... As he said in the latest issue of his Empire SPAC Investor newsletter... Today, speculation has left the SPAC sector. Questionable companies with little to no revenue are falling by the wayside... and rightly so. But that also means that many strong and promising businesses in the sector are now being completely ignored... Frankly, right now, anything that's a SPAC gets no respect, gets no coverage, and may sell down just because it's a SPAC. Enrique says this is actually a huge advantage... We've already loaded our portfolio here at Empire SPAC Investor with high-quality de-SPAC-ed names that have gotten clobbered but remain super attractive... These are all great businesses that will be among the few winners of the tsunami of SPACs that have hit the markets over the past few years. That's why right now, we likely have the best opportunity to invest in SPACs that we've ever had. There were a lot of deals for real-world businesses that, because they were a SPAC, were done at appropriate valuations and are now trading at a fraction of those valuations. The sharp pullback across the board has actually given us favorable entry points into these names... and we remain extremely bullish on these names and the sector over the long term. I don't disagree... and to that end, Enrique and his team just identified an opportunity with a company that went public via a SPAC that has a long track record of consistent growth – the opposite of the questionable start-ups with no sales (or as Wall Street likes to put it, "pre-revenue" companies) that have filled the sector. Where other investors might see a "boring" business, Enrique and his team see a potential opportunity for investors. You can get all the details in the February issue of Empire SPAC Investor... Find out how to get instant access [here](. As always, feel free to reach out via e-mail by [clicking here](mailto:feedback@empirefinancialresearch.com?subject=Feedback%20for%20Herb). And if you're on Twitter, feel free to follow me there at [@herbgreenberg](. My DMs are open. I look forward to hearing from you. Regards, Herb Greenberg February 15, 2022 If someone forwarded you this e-mail and you would like to be added to my e-mail list to receive e-mails like this every weekday, simply [sign up here](. © 2022 Empire Financial Research. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Empire Financial Research, 601 Lexington Ave., 20th Floor, New York, NY 10022 [www.empirefinancialresearch.com.]( You received this e-mail because you are subscribed to Empire Financial Daily. [Unsubscribe from all future e-mails](