These are numbers that homebuilders Hovnanian
While that may seem like pie-in-the-sky stuff to domestic homebuilders, Brazilian homebuilder Gafisa
Of course, nothing remains rosy forever. The Brazilian government raised interest rates half a point in June, following a half-point increase in April, in a bid to slow inflation. Another half-point jump is possible at the next meeting of the central bank. Yet these are seen as only temporary, and the rates -- expected to hit 14% -- are still well below the 40% experienced in the late 1990s. The undercurrent of growth remains fully intact.
That housing deficit mentioned earlier is expected to swell to nearly 13 million units by 2015, but the low-interest-rate environment means the ability to purchase housing will swell as well. For years, many Brazilians were unable to get mortgages, but government reforms have now made homeownership a possibility for millions. Banks are now obligated to offer mortgages equal to 65% of the total funds in their savings accounts, and they're not allowed to carry interest rates higher than 12% per year.
And while mortgage securitization these days has investors jittery because of the possible implosion of both Fannie Mae
Unlike the taxpayer-backed tag team, Brazil's mortgage securitization process is completely in the private sector, and it's expected to double over the next five years. Even if housing prices fall -- not likely, considering the demand for quality housing, but never say never -- with the mortgage covering a much smaller portion of the value of a home, there would still be plenty of equity to protect the lender. Banco Bradesco
Gafisa stands to profit from the growing need (and desire) for housing in Brazil. It is the second-largest real estate developer in the country, behind industry leader Cyrela, and the latest numbers show that year-to-date mortgage loan growth in Brazil was up 35% through the end of June.
Pre-sales for Gafisa -- a positive indication of demand -- grew by 62% in the latest quarter, while it more than doubled its land bank holdings and expanded into new areas catering to lower-income individuals.
Considering the current situation in Brazil -- growing wages and employment opportunities, a stable economy, and strong demographic trends in housing -- Gafisa is a homebuilder you can build a foundation with.
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