We all received some good news recently regarding the U.S. housing market. The long depression that crushed the U.S. housing market has finally shown signs of a recovery. Evidence of the rising home prices from the industry group Case-Shiller showed that the average residential property in 20 large U.S. cities rising 9.5% since the beginning 2012 and have made many a home owner happy. These increases will also pick-up the building of new housing stock. Who else will benefit from this turnaround?
Another group of individuals who should be happy are investors in the housing market. What companies benefit from this good news? Well, certainly the large publicly traded housing companies such as Toll Brothers Inc. (TOL), Lennar Corp. (LEN), and KB Home (KBH). But with most of the residential houses still being built by local private companies,
how can individuals benefit from this bullish news?
For those who are regular readers of this blog, the answer is obvious: Own the publicly traded companies that have and will benefit from the coming expansion.
When you own all of the publicly traded stocks, you own not just those companies concentrated on building new residential housing but also many that will also benefit from this new wave of housing. What are those other publicly traded companies?
Let’s begin with an example of the products that will be needed for the completion of a new home. The lumber may come from Potlach Corp. (PCH) and Boise Cascade Co. (BCC), the shingles from Beacon Roofing Supply (BECN) , and the decking from Trex Co. Inc. (TREX). The interior drywalls may come from USG Corp. (USG), the flooring from Mohawk Industries (MHK), the piping from Watts Water Technologies Inc. (WTS) and the paint from Sherwin-Williams (SHW).
There are many other companies from banks (Chase, Wells Fargo) lending money for the purchase to companies such as Home Depot (HD) and Lowe’s (LOW) supplying tools and supplies. New appliances may be supplied by Whirlpool (WHR). There are many more companies, but you get the idea.
All of these companies will benefit as the housing market begins to return to normal, as will the owners of their stocks. The key is not to time the housing cycles, but continue to own all of the publicly traded companies to benefit as many industry cycles ebb and flow. In doing so, you will help ensure that you are able to support your lifestyle in retirement as another housing cycle comes and goes.
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