Home prices are up 38 percent in five years while housing starts hit a 16-year high in 2002. Between March 2000 (when stocks peaked) and the end of 2002, U.S. households lost almost $6 trillion in paper wealth in the stock market . . . but gained $3 trillion in real estate.
The latest report from the National Association of Realtors found that sales of pre-existing homes rose 5.6 percent from March to April 2003, to the fifth-highest level on record, while the U.S. Commerce Department reported that sales of new homes also increased in April. Median prices were $163,400 for existing homes and $185,100 for new homes. (Average prices are much higher because luxury homes pull up that number.)
The bottom line: Americans are pouring money into their homes and someone must be making money. How can investors share in these profits? Your portfolio might include home improvement retailers (Home Depot, Lowe’s), appliance manufacturers (Maytag), flooring companies (Mohawk Industries), and so on. Low mortgage rates also mean lots of business for financial firms such as Country Financial and Fannie Mae.