Announcements, a likely pause, and opportunity for 2023

Published On: 21 December 2022Categories: by Dorr Capital

Brian Dorr, MBA, CPA, CPM

President & Chief Executive Officer

With the New Year fast approaching, it’s worth looking back on what has been a successful 2022, despite many challenges. The previous quarter was especially fruitful, with our fund still growing at an excellent pace. And culminating our team’s hard work, dedication, and disciplined approach to investing, Dorr Capital was recognized as one of Globe and Mail’s Top Growing Business for 2022, after achieving a revenue growth rate of 240% over the prior three years. I want to take some time to thank our team for their continued dedication and our partners for their continued support.

The investor event we held in October went incredibly well; it was great to finally see everyone in person again, and it was a lot of fun. Our speaker on intergenerational wealth transfers gave us insight into some of the future (tax) problems we hope to ease for future generations. We are already booking events for next year, stay tuned for updates.

Before we get into some details, we welcome a new external board advisory member, Peter Friedmann. An expert in housing in Canada, he comes to us with 35+ years of experience, including an extensive career at Canada Mortgage & Housing Corporation (CMHC). We will continue to add expertise for the benefit of our shareholders.

As for the fund, it is important to note that we are still growing! That being said, we are starting to see the effects of rising interest rates in the economy today, mostly in the form of hesitation. Interest rates are still likely to continue to rise, although they will likely stabilize and peak in Q1 2023. When those rates stop rising, we expect to see more activity in the housing market – though, recent housing starts have been anything but negative, with September housing starts coming in just shy of 300,000, up 11 per cent from August and the highest level since November 2021. Going into the winter and spring, though, expectations are for these to come down and present some new challenges.

Consider that, builders are still putting product on the market. And while there will be some percentage of builders waiting for more certainty on interest rates, i.e. their costs, there will still be a percentage building. Whether it’s 50% building 50% waiting, 60% waiting 40% building, or some variation, what we know is there will be a significant amount holding back. Of course, the initial land purchases will still be being made, meaning a lot of builders will simply stay longer in their land loans.

So, while we may have some short-term fluctuations in the next couple of quarters, the next few years are looking positive for our investors. The market is fundamentally undersupplied, and any price corrections are more likely to be temporary than anything. In 18 months, it’s looking more likely that we look back and ask what happened to all of those price decreases we were promised. We are ready and able to capitalize. We will go more into depth on the current situation in our next Dorr Insider Report, coming soon.

We look forward to wrapping up this challenging year and taking advantage of the opportunities next year as they present themselves. Please reach out if you have any questions.

Brian Dorr
President & Chief Executive Officer

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