D.R. Horton, Inc. (DHI), Lennar Corporation (LEN): A Housing Bust & Changes

Nothing Happens Overnight

Nothing happens overnight, which is good. It means that home builders and housing-related stocks probably have more room to run. Momentum accounts, then, should still like D.R. Horton, Inc. (NYSE:DHI) and Lennar Corporation (NYSE:LEN). If home sales keep advancing, their shares are likely to follow along for the ride.

Longer term, Blackstone’s move into the rental market may prove prescient. People have to live somewhere, and if they don’t own the house in which they live, then they are renting it. And, even if industry changes draw out the process, housing prices are likely to head higher over time. That’s an extra kicker for Blackstone and its shareholders.

The asset manager, despite owning over 26,000 homes, is widely diversified. So the impact of the property push will be muted somewhat. A more focused play on the institutional single family home market would be real estate investment trust (REIT) Silver Bay Realty Trust Corp (NYSE:SBY).

The company’s portfolio of over 3,000 homes hasn’t been fully rented. That’s a big occupancy risk in the near term, since the REIT only had tenants in 50% of its homes at the start of 2012. However, it opens up upside potential as the homes are fixed and rented out. A nearly non-existent dividend yield, however, means income investors should look elsewhere for now.

Watch and Listen

In the end, investors in or looking at the single family home market should keep an eye on the bigger picture changes that are taking place. The reaction to any change could be long lasting.

The article It’s Harder to Buy a House originally appeared on Fool.com and is written by Reuben Brewer.

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