There has been a lot of debate about whether housing has bottomed or not. From first hand experience, shopping for homes in NJ, I can tell you, emphatically, that prime real estate is in feverish demand. Literally, quality homes are being sold within 2 weeks of listing, if that long. For the house that I purchased, I actually paid at a premium, setting a new benchmark for the area.
About a month ago, USG announced their price hikes for sheet rock was accepted and absorbed by customers, sending the shares soaring. Then the market softened and housing stocks traded down. But in the big scheme of things, they have been greatly outperforming the SPY for more than a year.
Here is proof.
Using The PPT‘s correlation tool, still in BETA, here is the raw data for residential construction and the spread versus SPY, over a number of time frames.
As you can see, residential construction stocks have outperformed during ALL timeframes.
Here are the stocks that populate the homie index.
I recently got shaken out of cabinet maker MAS. But there are other plays still worth exploring, aside from the obvious listed above.
Lumber stocks, like LL and LPX, are interesting. USG and other material plays like VMC, RPM, BECN, MLM, EXP, TREX, CX and PATK have my interest. And, there are a variety of retail oriented stocks on my radar, particularly BBBY, PIR, FBHS, BLDR, ETH and VAL.
If indeed housing truly makes a comeback, I could see internet related names, like RATE, Z and ANGI, ripping tits to the upside. For the most part, the data isn’t there to support these moves. However, sometimes the market knows the future.
40 Responses to Who Said Housing Wasn’t on Fire?
I’m thinking allocate capital accounts into reserves for Europe trip when Euro hits all time low. Sometime this year into next.
I suggest others do the same. This requires longer term vision (naturally).
Also. It’s my conspiracy theory that many nouveau riche used the 2008 lows to land grab there as well.
In fact, probably such wealth cycling, paid for by the “little guy.”
USD is topping out. Don’t hold your breath waiting for parity.
Your premise is based on correlation, but statistics can change.
Don’t be beholden too long, lest you lose your pulse.
We’ll revisit this point at a later interval. Record.
Shaken out of $BZH but long $PATK. Congrats on the home purchase Dr. Fly. Currently building in upstate New York. Demand seems very strong here.
Went with building a new home? Nice move – hopefully you went custom build.
Not sure what custom build means in terms of what we are doing but the builder is one of the most reputable in the area which was important to us. Just your average colonial with 2 car garage.
don’t worry ‘he’ll cut corners and screw you over before it’s all done..they all do.
Custom build means you get your own plans/designs, then have the builder build it versus choosing from their three or four options with a few variations.
Although the major downside of custom building are all of the headaches/frustrations that go along with it.
Yea we are definately going with a cookie cutter builder but are excited to go new. Many different house types ranch/colonials so the neighborhood has lots of variety. Will post picture in fall when complete. Thanks!
The housing market is very tight in Denver..houses are selling within days often with multiple bids. Apparently inventory is pretty tight.
DLB gets sick margins from home theater builds, a business that got smashed with housing but could recover.
Interesting with DLB. The only downside is they are cut out of iPad royalties. It’s basically a legacy pc/lap top play.
install lots of granite..increases the value of your house!!!
Granite totally SUCKS! Ugly, scratchy, noisy, cold, breaks glasses and dishes.
Why not just pour concrete counter tops and sills?
Concrete counters are massively cool – I have an earthcrete bathroom that constantly gets admired
Not to smack the thesis, but shadow inventory may not be Case Schiller tabulated.
Also, how many of these “purchases” are motivated by foreign governments transplanting covert operatives in purposeful cells while securitized loans are bundled and your financial information is transmitted to foreign governments in violation of our American privacy?
Food for thought. That new foreigner neighbor who just moved in, is living on your mortgage “bond” arrangement, and YOU’RE the indentured examinee?
Preposterous theory. Truly deranged.
I “hope” you are correct M. LeFly as we do live in a time of “change.”
I wouldn’t worry about shadow inventory rocking into construction or home material sales.
That shadow inventory has been on the market for five year. Property values will probably keep collapsing because nobody wants to buy that shit, but it’s not like you’re going to salvage wood or nails out of these homes. They need to be bulldozed.
you wouldn’t be living in west hollywood or westwood would ya?
WY for a housing play
WY is a REIT now. I have it, but it’s more of a future income play than opportunity for gains.
My house burned down and I aint got no mo.
I wish my house would burn down….
when is YELP earnings? Earning Whispers has N/A 4 everything about them.
Wednesday is Yelp earnings. Last quarter earnings mean less than forward guidance.
housing is like stocks..buy low sell high..some folks never learn…or eventually learn the hard way…
LEN is a good play (I got shaken out early) They creamed the loan portfolio of a little bank in my County when the FDIC shut them down and liquidated their stuff. LEN got it at a huge discount in their Rialto subsidiary.
welcome to the Garden State — which town?
Housing in Madison, WI is moving decently quickly – starting to see cornfield suburbs get some building action
BREITBART CORONER FOUND DEAD, ARSENIC POISONING.
So sorry, he was a threat to national security.. Our condolences to the families.
It seems the “haves” market is booming.
According to Eric Sprott, no RE guy but:
New home sales:
2006 – 1.5 million
2011? 300 k
Real estate cannot go down;
they ain’t makin any more of it.
That said, could the homie stoks boom? Sure.
Fly, your excellence is appreciated. It’s like you do the work for us))
Pour le Fly –
You can’t even copy correctly.
Fly your totally correct some areas are up big time.
I have buying homes in fl prices are up 30% since last yr and over 100% since I started buying.