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3 Great Housing Stocks for 2021 and Beyond

By Matthew Frankel, CFP® - Updated Jun 22, 2021 at 2:35PM

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Here's a quick basket of stocks to play the strong U.S. housing market.

The U.S. housing market is on fire lately, so many investors are wondering the best ways to play it. In this Fool Live video clip, recorded on June 7, contributor Matt Frankel, CFP, and Industry Focus host Jason Moser discuss three excellent ways to invest in housing right now. 

Matt Frankel: I wanted to hit this one from Richard O, it says, "Top three holdings in building housing trends for the next 20 years. We could call it TMF basket, the Matt Frankel basket, boom. Thanks, bros." Thanks, Richard. I wanted to bring this one up because well, first I wanted to tease the show we're doing on Friday with our very own Anand Chokkavelu and Jason Hall, and we are ranking the top 15 housing stocks that we've all liked. I like housing because it's a really broad category. You have some REITs, you have some homebuilders, you have companies like Latch that make technology for houses. There's 10 different industries that you could call housing stocks. I don't want to give away my top three. But some that I really like right now.

Jason Moser: Can you give away one of the top three?

Frankel: Well, I'll give you REIT, I'll give you a homebuilder and I'll give you a tech company.

Moser: All right.

Frankel: The tech company I'm watching is Latch (LTCH 12.26%), that's one of my favorite. Over the next 20 years, I think the integration of tech into housing is going to be a huge growth market over the next 20 years and I think they are in a good position to take advantage. As far as a REIT, one that I really like in housing, it's an outside-the-box one, is called American Campus Communities (ACC), ACC.

Moser: Yeah, ACC, I know that one. 

Frankel: They pioneered the student housing industry back in the early '90s, and they built purpose-built Communities at colleges and universities. I think that the pandemic really reinforced young people's desires to get out and get away from home and live near campus and stuff like that.

Moser: Fly the coop.

Frankel: There's a lot of pent-up demand. I know a lot of people delayed their college education last year. So you're going to have a lot of people clamoring for new housing. They have some interesting outside-the-box partnerships. They're doing the housing for Disney's internship program. 

Moser: Wow.

Frankel: They're building a new housing campus in Walt Disney World. If anyone doesn't know, the Disney intern program is enormous. So they're building the housing for that. I can see a bunch of other one-off things like that going on. I think they're in a great position to grow over the next decade or so. That's what I'm watching in REITs. In homebuilders, there's a few homebuilders I like. One is Dream Finders Homes (DFH 0.40%). They're a pretty new public company. The ticker symbol is DFH. They specialize in the Sun Belt market, which is a big growth area. A lot of people are leaving the cities like where Jason is and coming down here where I am, especially after the pandemic, it really reinforced the desire for space.

Moser: Yeah.

Frankel: They are based in Jacksonville, I believe. They have a presence there, and Charlotte is a big market of theirs, a lot of the big growth markets in the Sun Belt. They use an asset-light business model, which I really really love, a few homebuilders do this. They don't buy land in bulk, they buy purchase contracts or options on land and only pay for it when they have the house sold. So it keeps their asset requirement very light. Like I said, recently public company, they're growing really fast. They specialize in the Sun Belt region. So there's three if you want a basket. I'm not saying those are necessarily my three favorites, you'll have to tune in Friday at 3 for that. But those are three of my favorites.

Jason Moser owns shares of Walt Disney. Matthew Frankel, CFP owns shares of American Campus Communities, Latch, Inc., and Walt Disney. The Motley Fool owns shares of and recommends Walt Disney. The Motley Fool recommends American Campus Communities and Latch, Inc. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Dream Finders Homes, Inc. Stock Quote
Dream Finders Homes, Inc.
$12.72 (0.40%) $0.05
The Walt Disney Company Stock Quote
The Walt Disney Company
$124.96 (0.56%) $0.70
American Campus Communities, Inc. Stock Quote
American Campus Communities, Inc.
Latch, Inc. Stock Quote
Latch, Inc.
$1.19 (12.26%) $0.13

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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