Marketing Home Products

According to a recent article on Seeking Alpha, there is good news for investors—the housing sector is rising. As the following charts show, the lowest period for this sector was in July and September of last year. Since then, the index has been moving back toward the April 2010 high.

The first chart shows the Philadelphia Stock Exchange (PHLX) Housing Sector Index (HGX), which is comprised of companies in the building and remodeling of residential homes, mortgage insurers and suppliers of building material. As you can see, the index has been steadily increasing.

This chart shows the Dow Jones Home Construction Index, which has a similar increase in recent months. A move back to the April high of 333 would offer a gain of nearly 15% for investors.

The final chart shows the SPDRs Homebuilders ETF (XHB), which represents the homebuilding sub-industry portion of the S&P Total Markets Index. The S&P TMI tracks all of U.S. common stocks listed on NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap Exchanges. An increase is also visible on this chart, and the move above $18.50 is a break from the five week consolidation.

What do these charts mean? They mean that the housing market is going to be giving investors some pretty good opportunities over the next few months.

If these charts don’t give enough proof, the rise in stock prices for companies such as Mohawk Industries and Lowe’s Companies does. These stocks are either on top of the range or breaking through the top of the range.

If those numbers don’t raise your confidence, you should know that on February 16 housing statistics for January were 596,000… way above the expected 520,000.

As the recovery makes progress, the housing sector will continue to rise. So, if you are willing to do some work and put in some time, invest in these opportunities.

Note: images modified from SeekingAlpha.com.

Offering another reason to believe the housing industry – and economy as a whole – is strengthening, the NAHB/Wells Fargo Housing Opportunity Index reported that nationwide housing affordability has reached a record high.

Based on households earning the national median income of $64,400, 2010’s fourth quarter saw a record level of 73.9 percent affordability… the highest it’s been in the 20 years of the index’s existence.

When Harvard issues a report, people listen. Last month, Harvard’s Joint Center for Housing Studies issued a study entitled “A New Decade of Growth for Remodeling.” The paper claims that “slowly but surely, the US home improvement industry is emerging from its worst downturn since the government began tracking spending in the early 1960s. Homeowners who deferred maintenance and improvements during the recession may soon start to spend more freely.” The study indicates that “spending on smaller projects–often to replace older features or upgrade basic systems–is expected to increase in share.”

Do industry insiders agree with Harvard’s somewhat positive outlook for the remodeling industry? K&A’s research shows that many do.

BizziBid.com, a national home improvement and remodeling website, is reporting a significant uptick in activity for January and early February. The number of homeowners requesting licensed remodeling contractors and free home improvement estimates this month far exceeds the number seeking home improvements and remodeling information through the site a year ago, the company said.

The Wall Street Journal claims, in an article entitled “No McMansions for Millennials”, that 20- and 30-somethings want the following things in home: larger shower stalls instead of tubs, open living rooms instead of formal dining rooms, and casual outdoor spaces. How will they achieve this type of space? Well, they can either buy a newer home with these elements or they can remodel an existing home, perhaps one they already inhabit and are having a difficult time selling. People of all ages – not just first-time homebuyers – are now looking for spaces that accommodate their active lifestyles; they’re looking for quality over quantity… without attempting to impress the Joneses with monuments.