Housing is booming, right? Actually, it is not. It is simply recovering a bit from the worst bottom in living memory. New home starts are still more than 50% below peak.
What is rising nicely is the price of the average home, 10.6% year over year according to Case-Shiller data released earlier this week. As prices rise, people feel wealthier – and they also see their home once again, as place to invest in. So they buy materials for renovation projects, paint appliances, furniture and so on.
The takeaway for investors: buy the inside, not the house itself. A recent Changewave research (part of the 451 Group) consumer spending survey shows consumers are spending more here and there and feeling considerably better about the economy. Where are they spending? After fun stuff – travel and restaurants – the winner is consumer durables followed by home renovation.
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What looks good?
On the following pages are 5 Great Stocks to Own for the Housing Recovery.