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How to Make Money Off the Housing Market

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  • Description

    RBC Capital senior analyst Robert Wetenhall breaks down homebuilder stock plays.

  • Duration 2:40
  • Date

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Dollar and eleven -- -- -- about housing July housing starts.

Dropped slightly -- building permits one indicator of future home sales hit a four year high.

It's encouraging so how can you translate these positive signs it's actually making money off the housing market well.

Because someone who can help us without joining me -- wet hole RBC capital markets senior analyst for real estate stocks of Bob.

We've seen some encouraging data would just look at that have seen some encouraging data but there -- people have -- assailant the housing market is gonna bump along the bottom for a while.

Do you agree with that and which I would say indicates that the housing markets go a long way to go yet.

I think the -- market has long way to go out it's a frat John Mason recovery.

We have a lot of headwinds in the economy.

Slow GDP growth lot of unemployment.

So we need those factors to be more cooperative -- -- really gonna get an uptick in the housing market.

All the strength we saw today was multifamily.

Not single family.

That's a very broad based strong trend which we expect to continue through the rest of the year so how does the investor -- is how can you play the housing market.

-- make -- money.

So we like the fundamentals of the housing market the next two to five years as we grind towards a new normal which is still pretty depressed -- BI key point is building products companies supplied both multifamily and single family.

So if you're looking for a good place to achieve growth and get stronger earnings we're looking -- Fortune Brands home security which really caters specifically.

To -- residential construction very did.

A couple of big names in the industry KB homes.

-- -- -- Love this story like management -- asset base had a bad start of the year tough first quarter some operational snafus got in the way.

Second quarter was good there's still some doubters on the story we think the issues with the story have been ironed out they're back on track operationally.

We looked for a strong second half performance for a battle over the distressed properties -- inventory -- has to get through the system how does that impact some like Katie Holmes.

You know in our general view.

Shadow inventory which is a huge amount equal to twenty months peaked out last year in the third quarter at twenty months to supply.

It's now down to fifteen continues to grind lower.

In our opinion.

-- good stuff is our have been picked over by investors so now through buying a house you're probably looking at a new home as opposed to finding a bargain in the foreclosure been busy getting easier to get a mortgage Bob -- but it's really tough so tough race -- at all time lows.

High level of affordability.

Access to credit remains severely limited to only the highest quality borrowers that's a big had went to -- and how Smart is that gonna change any time soon highly unlikely highly unlikely all right Bob what level obviously capital markets things.

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