Why you Need Home Remodeling Stocks in Your Portfolio

It’s simple, really. Despite the recent positive news in housing, growth is slow and many homeowners still haven’t recovered from the housing bust of five years ago. According to Forbes, many people are staying in their homes longer and choosing to remodel instead of selling at a loss.

The remodeling industry is the big winner. Projections call for revenue of $500 billion in 2013 if all goes as expected. Better yet, as the housing industry grows so will the remodeling industry. It’s a win-win of the highest magnitude.

The reason? New homeowners spend double the amount of existing homeowners in the first two years of ownership. They spend it on items like paint, room restructuring, basement refinishing, and appliances, to name a few.

Further, a recent survey conducted by Better Homes and Gardens Real Estate and reported by The Wall Street Journal discusses a new type of homebuyer on the market. These 18-35 year-olds are rewriting the rules of homeownership and reinterpreting traditional norms to fit their values.

Results of the survey indicate that the next generation of homeowners seeks more purpose-oriented homes, equipped with the technology they are used to, as opposed to stereotypical luxury homes preferred by their parents' generation.

82 percent of these "Millennials" embrace their independence and prefer to handle home improvements on their own. Dubbed the “Fix-It” generation, they are prepared for home maintenance tasks and would actually prefer a "fixer-upper" to a house with minimal repairs needed or in “move-in” condition.

They aren't afraid of rolling up their sleeves either. Nearly half of survey respondents are more likely to tackle a home maintenance problem themselves instead of calling a professional.

Stocks that have exposure to remodeling have done well over the past 12 months. These include Sherwin Williams SHW which is up 55 percent, Home Depot HD, on the plus side by 44 percent, Lowe’s LOW, up 35 percent, CaesarStone Sdot-Yam Ltd. CSTE, a whopping 107 percent increase, and Lumber Liquidators LL, up an amazing 174 percent, to name just a few.

Given the positive condition of the housing market, the numbers of homeowners considering remodeling, and an entire generation of new homeowners ready to get their hands dirty when it comes to working on their homes, investors have plenty of reason for optimism when it comes to the future for remodeling stocks.