BLOGThe Bird's Eye View
Timely Perspectives, Unconventional Thinking
We’re excited to share timely market insights, thoughtful perspectives and expert commentary as part of our commitment to providing modern investment solutions to modern challenges.
BLOGThe Bird's Eye View
Timely Perspectives, Unconventional Thinking
We’re excited to share timely market insights, thoughtful perspectives and expert commentary as part of our commitment to providing modern investment solutions to modern challenges.
A Market of Homes
Senior Managing Director, Head of US Real Estate and Consumer Debt Strategies, Napier Park Global Capital
Lower mortgage rates and slowing price growth have supported momentum for both new- and existing-home sales in the US.1 New-home sales activity has been bolstered by easing mortgage rates and ongoing homebuilder incentives, illustrating both the pent-up demand for housing and the commitment of homebuilders to support the market.2 Existing-home sales, which account for the vast majority of US housing market activity, have also picked up but remain well below historical trends.3
The combination of sluggish existing home sales and homebuilder incentives has also narrowed the historical price premium of new homes relative to existing homes. This has been a drag on transitional lending activity, which has declined to 6.8% of total home sales from a peak of 8.6% in 2022.4 We believe this highlights the importance of distinguishing between a “market of homes” and the “housing market”—which is to say that the sluggishness of existing-home sales at the national level doesn’t mean that move-in ready, well-priced homes in desirable neighborhoods are going to sell slowly.
Structural tailwinds remain intact, however, and we expect the demand for renovation capital to persist given that the median age of owner-occupied homes is 41 years.5 Many of the homes that do change hands are in need of renovation; we see significant opportunity to lend capital to experienced developers that can renovate homes within supply-constrained existing communities, which are frequently selling at attractive price points relative to new homes and has the potential for solid profit margins.
Housing market dynamics highlight the importance of lending to experienced developers.
Precious metals experienced a significant correction on Friday, January 30, with gold (-8.95%) and silver (-26.36%) posting their largest single-day percentage declines in history.1
Despite this selloff and subsequent volatility in these markets, we believe the structural role of gold bullion and gold-related securities as a potential hedge remains intact—and perhaps more important than ever—given rising global debt levels, ongoing fiscal pressures, and persistent monetary and geopolitical uncertainties. As illustrated by Friday’s price action, however, disciplined security selection and appropriate position sizing are paramount.
The immediate catalyst for Friday’s selloff was the nomination of Kevin Warsh as the new Federal Reserve chair, set to replace Jerome Powell in May 2026. The choice of Warsh was viewed as less dovish and more supportive of Fed independence than widely anticipated, which weighed on the debasement trade and sparked an extreme reaction in gold and silver markets that appeared short-term overextended following strong rallies.
We believe it is important for investors to keep the decline in perspective. While Friday’s selloff was large, it merely sent the price of gold and silver back to peaks established earlier this year.2 Meanwhile, in our view, gold’s valuation continues to look reasonable on a historical basis relative to the stock of US public debt or equities.
In our view, gold’s valuation continues to look reasonable on a historical basis relative to the stock of US public debt or equities.
Corrections, in our view, are a natural and healthy development following strong upward moves in price, helping flush out excess froth in the market while creating attractive opportunities for disciplined investors. Though painful in the short term, corrections do not necessarily undermine long-term investment theses. The 1987 stock market crash is a classic example; while the S&P 500 sold off 28.5% over the course of several days in October, it did not derail the broader structural bull market in equities that spanned from 1980 to 2000.3
While we won’t hazard a guess at the short-term direction of gold prices, we are confident in the metal’s value as a potential hedge amid an increasingly complicated investment backdrop.
