3 Ways To Profit From The Current Housing Boom

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Data from the National Association of Realtors shows that the real estate market has been showing high performance. Home sales for the month of August are higher by 10.5% from last year’s sales. The median home price was also up by 11.4% from August 2019 and has reached USD$310,600. This means 102 consecutive months of increase. It certainly signals that it’s a great time to get into buying and selling homes.

If you’re planning to sell your home in the hot market state of Vermont, you can check out Burlington House Buyers and other similar sites. There are also other ways of making money from the current housing boom, even if you don’t feel like getting into the home buying-and-selling game. Here are a few suggested ways by which you can profit from the current housing boom.

1. Buy And Sell In Hot Markets

Of course, the most direct way for you to profit from the current housing boom would be to go into real estate investment. There are a lot of hot markets in various states across the country. Unlike the housing boom in the middle 2000s, economists say this current housing boom is a whole lot different. They say the mid-2000 boom was only experienced in a few states notably among the sunbelt coastline states and a few inland cities. This one’s happening in all states.

Economists and real estate analysts shared this staggering insight why they think the current housing boom is so much different from the mid-2000s boom and is therefore expected to last so much longer. They say the basic distinction is that the main driver of this current housing boom is the population dividend. According to sales records and reports from the National Association of Realtors, most of the current home buyers are aged 31 years on average. This means that most of these buyers belong to the millennial generation.

Yes, that’s right. The average age of the millennial generation is now 31 years old. And contrary to the myth told about them, they’re buying their own homes. Another important insight here is that the millennial generation is a significantly larger population cohort than the generation X which came before them. In short, this one’s not a housing bubble.

2. Invest In Homebuilder Stocks

There are ways of profiting from the current housing boom even if you’re not going to take part in the housing market by buying and selling houses. There’s no way of predicting how long this seller’s market will last, but one way of raking in profits without even buying a single home is by investing in homebuilder stocks.

Based on sales records, homebuilder stocks are expected to register strong performances in the third quarter. The latest report from the Census Bureau indicates that there were 4.8% more new home sales in August as compared to July. There were also 43.2% more new home sales compared to the 706,000 new home sales made in August 2019. The average sales price was USD$369,000 in August 2020, while the median sales price was USD$312,000 in the same period.

This is very good news for homebuilders, most of whom are already logging record sales amid frenzied market activity. One of the largest homebuilders by volume closed 61,164 homes during the 12-month period ending in June 2020. The stock of D.R. Horton (NYSE: DHI) surged to USD$75. Another homebuilder, Lennar (NYSE: LEN) has seen its stock skyrocket to USD$80 from USD$29.35 in only 7 months. They’re expecting growth for several years to come. Meritage Homes (NYSE: MTH) jumped to USD$102 from USD$27.29 in the same period.

3. Invest In Home Improvement Stocks

In a housing boom, the next thing to go after homebuilder stocks is the stocks of home improvement and renovation materials and supplies. The reason for this is that around 80% of home sales in America are old houses. Not a lot of Americans buy brand-new or newly-built homes. A vast majority buy old homes or homes that have already been inhabited.

Of these old houses, most were built before 1970. And guess what, the most buyer would then spend hundreds of thousands of dollars improving and renovating these old houses. There’s already evidence of this in economic activity as home improvement stocks are already booming. The stocks of home improvement and renovation supplies stores have been hitting all-time highs in recent months.

It’s Not Going To Crash This Time

There are several other reasons why economists and realtors are more excited this time about the current housing boom, even though the last housing boom in the mid-2000s ended in a very bad crash. For one, these home buyers are now qualified buyers because they can’t get liar loans or subprime mortgages anymore. There are a lot more restrictions now on loans underwriting than there were before 2007. Another reason is that having millennial buyers means they’re buying to have their own homes, and not to speculate. This means it’s not going to crash this time.

 

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