- The housing market has been remarkably resilient in 2020.
- A recovering economy and 0% interest rates should help the housing market hit new heights.
- A number of stocks will be winners from this strong housing trend.
There was always a lingering fear after the Great Recession that the housing market would collapse the next time the economy took a downturn. Well, here we are. And housing has held up rather well despite the volatility in stocks.
While housing statistics have been off in the past few months, they look far better than the data covering other parts of the economy. Most real estate investors feel outright optimistic right now.
In fact, some analysts see this as a sign of strength. And they say many housing-related stocks will likely climb far higher from here as a result.
As Ivy Zelman, CEO of Zelman & Associates, told CNBC on Wednesday (video above):
We raised price targets on average about 25%. With today’s pullback we have stocks with 30-plus% upside to our price targets. We really see great, compelling value.
Why the U.S. Housing Market Has Remained Spectacularly Strong
A number of factors have played into housing’s favor during this crisis. First, during the last recession, housing was seen as an epicenter.
Over the decade since, lenders have increased underwriting standards, requiring higher down payments and verified income. Homeowners have shunned leverage and large cash-out refinances as well.
That’s kept leverage in the space down and provided a cushion against today’s market uncertainty.
Those trends kept housing demand low for years. But that’s the real story today. Housing demand has gradually risen over the years. Now, demand is so strong that sales are up year-over-year after a brief dip during the worst of the economic lockdown.
As home prices…