We recently published a list of 12 Best Residential Real Estate Stocks To Buy According to Analysts. In this article, we are going to take a look at where Forestar Group Inc. (NYSE:FOR) stands against other best residential real estate stocks to buy according to analysts.
As reported by CNBC, a troubling sign for the spring market is the homebuyer mortgage demand declining. While more listings are coming up for sale, home buyers are not really convinced to be a part of the spring housing market. The supply of homes for sale is up 25% as compared to the prior year, with the supply gain coming from homes sitting on the market for longer.
Redfin reveals that the average time to sell a home in the month of January was 54 days which is the longest since March 2020. Regardless, the supply lags from January 2019 by 25%. Back in January, Redfin reported that home prices have risen year-over-year in all 50 of the most populous metropolitan areas in the United States in December. Redfin Senior Economist Elijah de la Campa, reiterated the state of aggravating unaffordability, stating:
“Affordable housing havens have become harder and harder to come by; even places that saw some price relief last year, like Texas and Florida, are now seeing prices tick back up. Many people looking to move this year will likely opt to rent because it’s the more affordable option and rental affordability is expected to improve as more supply comes on the market.”
Brown Harris Stevens CEO Bess Freedman, recently joined CNBC to discuss the current housing affordability in the US. In her opinion, the current mortgage rates are the new normal and they could stay in the 6% range for quite some time even though they might dip a bit lower. Affordability remains an issue with first-time homebuyers nearing their 40s while they used to be 28 or 29 years old some ten years ago. The market is picking up but buyers continue to be rate sensitive. More activity could be seen if the rates decline even slightly in the next months. Overall, she tends to be bullish on housing saying that the US needs to get to a place where young people can buy their first home.
Our Methodology
In order to compile a list of the 12 best residential real estate stocks to buy according to analysts, we first used a stock screener to screen residential real estate stocks that have the highest market caps. Moving on, we shortlisted the 12 stocks with the highest average upside potentials, as of February 5. The 12 best residential real estate stocks to buy according to analysts have been arranged in ascending order of their average upside potentials.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An aerial view of a large, newly constructed residential community in Arlington, Texas.
Forestar Group Inc. (NYSE:FOR)
Average Upside Potential: 70.92%
Forestar Group Inc. (NYSE:FOR) is one of the largest residential community developers in the United States which primarily acquires entitled real estate and develops it into finished residential lots for sale to homebuilders. Forestar is a majority-owned subsidiary of D.R. Horton.
Forestar’s strategic relationship with D.R. Horton, one of the largest American homebuilders, presents it with significant built-in demand for current and future lot deliveries. The firm is more geographically diversified than most home builders with active projects in 59 markets in 24 states and 95,100 lots controlled, as of September 30, 2024. Forestar delivered more than 15,000 residential lots during fiscal 2024 while witnessing a 1,078% increase in lots sold between FY 2018 and 2024.
As a highly differentiated, pure-play, residential lot developer for the affordably priced single-family home market, Forestar Group Inc. (NYSE:FOR) is demonstrating solid operational execution and increased profitability. The firm closed fiscal 2024 with net income increasing 22% and revenues increasing 5%, year-over-year. Over the last five years, the firm invested nearly $6.7 billion in land acquisition and development and delivered more than 70,000 finished lots to local, regional, and national homebuilders.
Overall, FOR ranks 1st on our list of best residential stocks to buy according to analysts. While we acknowledge the potential of FOR to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FOR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
