Home Depot may Improve as Real Estate Improves

It may be time to start considering the home-related stocks such as The Home Depot, Inc. (NYSE:HD) or Lowe's Companies, Inc. (NYSE:LOW) as the real estate market may be in the early stages of its recovery.  People are buying houses these days, albeit at discounted rates on foreclosures, but they are buying.  Once these people are in their homes they tend to want to start fixing up the place, especially after some months of neglect as the previous owners likely did not have money and time to maintain the homes.  This could really show up in the sales of companies like Home Depot and Lowe’s.

James B. Stewart of Smart Money reports that at the end of August, the S&P/Case-Shiller U.S. National Home Price index of real estate values improved last quarter over the first quarter of 2009.  That marks the first quarter-on-quarter increase in three years. The index of 20 major cities also rose for the three months ending June 30 over the three months ending May 31.  Only two cities, Detroit and Las Vegas,  experienced declining rates. The week before that, the National Association of Realtors reported that sales volume of existing homes was up 7.2% in July from June.  This may be partially related to the government’s first-time home buyer program.

Put all that together and it seems to suggest that the bottom may have hit in Q2 and we are beginning an upswing.  Obviously we cannot predict the future, and it is possible for things to go lower, but it does seem like the worst of it is behind us.  There is no magic date of when the real estate market turns around, and if you wait until you are “sure” it has turned around, you will likely be too late. 

Stewart begins his story with a really good example of young (taxi?) driver that made an excellent deal in Florida on his first home.  He also provides in-depth explanation for rationale as to why the real estate market may be rebounding.  Read the entire story…