Good morning,
Some economists talk about the “wealth effect.” This is a behavioral economic theory that suggests people buy more when the value of their assets is on the rise.
This wealth effect is generally tied to stocks, but it also applies to assets like homes. And since 2020, some homeowners have been feeling pretty wealthy.
Home values are at record highs. Many sellers received multiple offers on their homes for higher than their listing within days or even hours. Some of these were sight unseen and without contingencies. Sweet!
The principles of supply and demand – along with higher interest rates – has reduced the supply of existing homes. But that’s creating demand for new constructions. Housing starts are volatile, but remain mostly bullish.
All of this illustrates just how important the housing market is to the overall economy and to investors’ portfolios. While it may not be time to sound the all clear on the housing market, it does show why now is still a good time to be looking at housing stocks.
Housing stocks encompass a range of companies including homebuilders as well as home furnishing companies, home improvement companies, and adjacent industries like lumber and other construction-related stocks.
The focus of this presentation is on seven housing stocks that continue to show strength in a challenging environment. In addition to looking at several homebuilders, this presentation looks at several companies that have businesses that are adjacent to the homebuilding market, but still look to provide investors with solid gains in 2023 and beyond.
View the 7 Housing Stocks that You Can Build Your Portfolio Around
The InsiderTrades.com Team
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When we talk about investing, it's kind of like choosing what kind of toy you want to play with. Some toys are really exciting and can do lots of cool things, but they might break easily. Other toys might not be as flashy, but they're strong and last a long time. Today, let's talk about a special kind of investment called "housing stocks." These are like those sturdy, long-lasting toys.
Housing stocks are shares in companies that are all about houses and places for people to live. This includes companies that build houses, sell materials to make houses, or even those that help people buy and sell homes. Now, why would someone want to invest in housing stocks? Well, just like everyone needs clothes and food, everyone needs a place to live, right? That's what makes these stocks interesting.
First, let's think about a neighborhood. In a neighborhood, there are all kinds of houses - big ones, small ones, and some that are being built. The companies that build these houses can be a good investment. When lots of people are buying new houses, these companies usually make more money. And when these companies are happy, people who invest in them can be happy too because their investment might grow.
Then, there are companies that make things like bricks, wood, and pipes that are needed to build a house. These are really important too! Just like you need blocks to build a big tower, builders need these materials to build houses. If a lot of houses are being built, these companies might sell more materials and do really well.
But, just like in a game, there are rules and surprises. Sometimes, when it gets harder for people to buy houses, like when prices go really high or when it's tough to get a loan from a bank, these housing stocks might not do so well. It's like when you're playing a game, and suddenly it gets a bit harder to move forward.
Now, you might be wondering, "Should I invest in housing stocks?" Well, think about it like this: In your toy box, you want different kinds of toys, right? Some for when you feel like building, some for when you want to run around, and some for quiet time. In investing, it's kind of the same. You want different kinds of stocks for different times and situations. Housing stocks can be a good part of your collection because people always need places to live, but you also want other types of stocks to balance things out.
Also, remember that investing is a bit like planting a tree. You don’t plant a tree and expect it to grow big overnight. It takes time and patience. The same goes for investing in stocks, including housing stocks. Sometimes they might grow quickly, and other times they might grow slowly. But if you're patient and keep learning, you might be happily surprised in the long run.
In conclusion, housing stocks are an important part of the big world of investing. They're about homes and all the things needed to make them. They can be a good investment because people always need places to live. But just like in a game or when choosing toys, it's important to have different kinds to make playing (and investing) fun and safe. Remember, investing is for the long haul, like watching a tree grow and become strong. And that's what makes it exciting!
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