Buy stocks, buy houses, you have that much money?
Heading into 2019, there are few bets more contrarian than U.S. housing. Since January, investors have been selling off anything construction-related. Homebuilder stocks have been halved in many cases. Building products suppliers and distributors have performed just as poorly — if not worse. Even Home Depot (NYSE: HD ), one of the best large-cap stocks in the market since the financial crisis, and one of the best companies in America period, has dropped 20% in a matter of months. As a result, the iShares US Home Construction ETF (BATS: ITB ) has declined sharply. ITB shares are down nearly 30% so far this year – and by more than one-third from late January highs.
There are some reasons for the selloff, admittedly. ITB is homebuilder-heavy, and rising interest rates appear to have caused new home demand to soften. Inflation, labor shortages and tariffs are driving expenses higher. Homebuilders, and their suppliers, look pressured in terms of both revenue and costs.
But at this point, the bad news looks priced in … or close. Yet there are multiple catalysts to send the group higher. Any resolution of the trade war with China would help the sector. Earnings can stay strong, as they’ve been for much of 2018. Housing starts can re-accelerate from post-crisis levels that remain well below historical trends.
Time to buy a new construction. Price about the same as existing house.
Go or is it ?
Buying new constructions is not the the most financial prudent thing to do… good for enjoyment but less good as an investment.
As a Primary. Time for you to enjoy a brand new house and not squat in a million dollar shack! You’re no longer YOUNG!
No match to SFO climate ! If I am not employed in south bay, I would prefer to move to SF hills for primary home !
Usually older people move to a smaller house to retire. You are doubling your space and moving into a brand new palace.
Living now, 1200 sqft less than this, built 2005, I got it for $700k during 2011 Short Sale !
Living ever in Bay area now. Listing photo.
Another issue with new construction is that they usually don’t come in single level. Older people would need to walk up and down all day.
@hanera, install an elevator in your new palace?
Mountain Houses costs similar
Interior California, you can get like this (635k list price).
Is this a a better deal? $269k for 2800sf
Looks like a shack.
For rental is ok.
3k+ old houses vs nearly 5k square footage? Round Rock 78681 is a very safe zip code with very good schools. Can we say of MH?
I didn’t buy that double story mansion because of those issues that you have raised Mine is a Single Story new construction.
You reminded me the homes I missed !
There were plenty in year 2008-2011, here you go the home I missed with 15 bids during 2012, expenisve home compared to Texas. Bay Area is expensive.
I did consider MH then, my wife said is too FAR.
5k feet new construction? That would be HUGE.
During 2008-2011, I saw lot of newly built Tracy homes (3500 sqft to 5000 sqft) of the range 350k to 450k.