Investing in Housing

During the organized chaos that’s characterized the stock market in recent years, one division took an especially hard hit: housing stocks. Real estate bankruptcies and short sales cluttered the market, making it difficult for construction companies to sell their current offerings…let alone build new ones. As a result, housing stocks took a huge dive.

Now that the economy is cautiously rebounding, construction and housing-related stocks are starting to come up, too. As early as January 2011, KB Home (KBH) announced a fourth-quarter profit larger than analysts had been expecting. As the companies stabilize, their assets go up — and so does their stock.

One housing stock that has been doing well recently is (PHM) Pulte Homes. (Disclosure: I’ve owned this stock for years off and on. No, I’m not getting compensated for mentioning it or other stocks here.). This megabuilder not only sells and constructs homes, but also provides mortgage financing and develops adult communities. After a rough ride, including watching its stock slide from the $60s level to as low as $3 and change, it finally began to rise. In the past week, it traded at a new 52-week high of $9.59, and as of this writing, may well be beyond that. It’s also periodically offered dividends — a bonus for the steady investor.

Pulte may be one of my personal favorites, but it’s not the leader in the market. According to Financial News Network Online (FNNO), that honor goes to Meritage Homes (MTH), with a gain of nearly 6%; Ryland Group (RYL) ranks second, with a gain of 4.68%, and Pulte comes in shortly after with 4.53%. Lennar [LEN] and MDC Holdings [MDC] round out the top five with similar increases.
Are the hard times over? Probably not. But as far as housing stocks go, they do seem to be improving. If you haven’t added any to your portfolio, now’s the time to consider doing so.

There’s another way to invest in housing: upgrading your own domicile. New double-paned windows not only cut down on drafts and cold spots, but reduce your energy bills — ours, installed in January, have cut our utility bills in half. That money not only pays back the initial bill; it’s also increases your home’s overall value.

This post is by staff writer Cindy Brick. You can visit her at CindyBrick.com or visit her personal blog.

2 thoughts on “Investing in Housing”

  1. As long as you do it carefully…

    I did sell some Pulte stocks, but am planning to buy right back in shortly — I’ve just got a feeling that stock prices in general are going to fall pretty soon, so took some profits before they did.
    Now watch: the housing stock prices will take a big jump, instead!
    Thanks much for posting.

  2. I think they got deflated a bit further than they really should have been. Yes, the market was bad, but was it as bad as the stocks fall? Not really. It might be a really good sector to start getting back into.

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