Charting the Real Estate Bubble
BigCharts.com has a free charting service where the Dow Jones Housing sector can be tracked. I am following KB Homes (KBH)- America's largest builder, Pulte (PHM), DR Horton(DHI)-largest cap builder. There are 31 builders in the DJ Construction sector.
If you track
target='new'>KB Homes from 10 years back until today, you can see the remamrkable rise of their stock. It seems to parallel the rise in housing prices.
Since KB Homes is the leading builder in the first time home buyer segment, it would seem any weakness in their sales would show up pretty quickly in their bottom line. They have to report results on a quarterly basis to Wall Street, and any hint of problems would reflect in the value of their stock.
I also check the websites for these builders and see what markets they are building. To most investors, it is a guessing game as to where to invest their funds...To these guys, it is a business..They guess wrong too often and they GET FIRED.
Looking at the charts of these major builders over the last 2 years, I see no weakness anywhere. In my opinion, housing is still a very good investment.
NVR has been a great stock for me since 2001. I sold it earlier this year though to invest in index funds.
Great Point. Thanks for sharing...
This is a great article and thank you for posting it as well.
For years I have charted my real estate related stocks portfolios for a guide in my on the streets real estate investing. For example as a whole investing in rental properties is simply an ugly market in most metro areas and my stocks charting displayed many indicators that this was coming so I simply made a switch to lease option purchase my properties out.
I have added two links to help understand the value of charting:
http://www.suite101.com/discussion.cfm/investing/103933/1024968
http://realtytimes.com/rtcpages/20040720_reorstock.htm