We've been seeing the data come in over the last year: new housing starts at multi-decade lows, demand passing supply, home values ticking up. It's a hard fact to swallow, given the last five years -- but housing is on its way back up, folks. Time is running out, though, as the market is starting to catch on. If you want to make a bullish play on housing, now is the time.
You may have heard that the U.S. economy grew a little slower than we wanted it to -- 1.5% in the last quarter, to be exact. But if you take a look at the Residential Fixed Investment growth rate -- a metric the Commerce Department uses to measure housing -- it's a much more attractive 9.7% annual growth rate. And if that doesn't impress you, that 9.7% growth in the second quarter is coming off 20.5% growth in the first quarter! I'm sorry, housing nay-sayers, but this sector is making a big leap forward.
As far as new home construction goes, homebuilders started more new projects in June than any month since the financial crisis. I wouldn't go as far to say that the state of the average household is improving as dramatically, but it doesn't seem to be. As suggested by mega investors such as Bill Ackman and Warren Buffett, the housing market has no choice but to improve as years went by without new homes being built while the U.S. population was growing. At some point, new homes needed to be built.
Hedge your bets
Without creating too much exposure to possible downturns, there are a few places to put your money in the game. The obvious pick for many is Berkshire Hathaway
Buffett was spot-on with his Wells Fargo bet -- essentially a bet on housing, but even more of Berkshire is in on the big secret.
More Berkshire, less problems
Berkshire and similarly structured Leucadia National
And just like Buffett, the Leucadia leadership is big on housing. The holding company also owns lumberyards. Lumber is a major raw ingredient in many homes.
A basket of homes
Warren Buffett is often quoted saying if he could buy a basket of single-family homes, he would. I would argue he has basically done that with the Wells Fargo investment and his other housing bets, but you have yet another option to buy some homes.
If you aren't convinced any one housing play is deserving of your retirement dollars, check out the SPRD S&P HomeBuilders industry-tracking fund
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Fool contributor Michael Lewis owns none of the stocks mentioned above. You can follow him on Twitter @MikeyLewy. The Motley Fool owns shares of Berkshire Hathaway. Motley Fool newsletter services have recommended buying shares of Wells Fargo and Berkshire Hathaway. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.