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Home Builders in the United States Housing Market as the Recession Lifts

The United States housing market has perhaps bottomed out as the recession shows signs of being on the mend. Although United States housing prices are still down substantially from last year they are not dropping month by month. This may be a good time to look at the large home builders. Some of the larger home builders have locked up large tracts of land in prime markets and will be in a favored location as the recession lifts.

We have talked about what stocks will survive a bad recession and have talked about high cost of entry businesses as being protected. Another category is businesses those which have some part of their market locked up with no possible entry of competitors.

Some the of larger United States home builders come to mind such as Horton, Pulte, Lennar, Centex, KB Homes, Centex, Beazer, Hovnanian, Ryland, MDC, and NVR.

Many of these companies have a lock on large tracts of land in prime locations. Many of these United States home builders have taken a really big hit during the recession. However, as the recession lifts and United States housing comes around these folks still have prime land in locations where there is no more land for other home builders.

It may not be that you will want to invest too early in any of these companies but here is where the purchase of call options in home builders in the United States housing market may be a good idea. For a small fee you can lock in part of the anticipated recovery of the United States housing market and not get caught in a market correction before a big move happens in the housing market.

We can assume that the recession will mend sooner or later, as they always do. We can assume that the United States housing market will recover and home builders will get back to work being home builders. The questions are when and how fast will the recovery be, and if there will there be corrections. If you believe that the United States housing market is going to suffer corrections during its recovery from the recession then you want to simply put in a limited order at the price you anticipate and wait for the United States housing market to come to you.

This strategy, like most successful strategies, will take a little homework. Keeping a folder of the big home builders and keeping tabs on which have large reserves of land as well as reasonably solid financials so that they can resume operations when necessary would be a good idea.

In a year or so the recession will be in the past and the focus will be on the future. We suggest that the successful long term investor needs to put his or her self into that future mindset now. Looking at how large United States home builders will come out of the recession in the United States housing market is a good place to start.





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