[COLUMN] Top housing ETFs

Housing slowed down during the early part of the coronavirus pandemic. However, the combination of ultra-low interest rates and desire for more space to ride out the virus storm has brought about a surprisingly strong rebound in the market. New home sales exceeded 1 million units, up more than 40% the year before.

The National Association of Realtors and Census Bureau showed that sales of new and existing homes in the U.S. surged to their highest levels since the housing bubble burst in 2006 and 2007.

By the way, ETF stands for Exchange Traded Funds which are like mutual funds that you are more familiar with but can be traded like stocks (unlike Mutual Funds that only be bought and sold at the end of a trading day).

Here are my top three ETF Exchange Traded Funds for 2021:

1. iShares U.S. Home Construction ETF ITB:

ITB is focused on homebuilders. Two-thirds of its portfolio targets stocks like D.R. Horton, Lennar and NVR Inc. It had a great 2020 year as its price rose from $22 to $60 – up 170%. We expect another great year for 2021. Rating of ITB:

• Good: Bar Chart buy.
• Schwab: Morning star 3***, $10,000 invested 12 months ago rose to $12,667.
• Holdings: Good.
• Sy grade: B.
• Buy? Yes.

2. SPDR S&P Homebuilders ETF XHB:

XHB has holdings in building products (36%), homebuilders (30%) and home improvement, home furnishing, home furnishing retailers, and household appliance companies. Rating:

• Good: Lipper 4/5*****, Bar chart strong buy, Stock Invest Buy, P/E ratio low PE 19.6, Price to Cash flow 10.48.
• Schwab: Morning 2/3***, Average return of $10,000 after 12 months $12,665.
• Sy grade: B/B+
• Buy Yes.

3. Hoya Capital Housing ETF HOMZ:

Homz uses a proprietary index that combines residential REITs (30% ) with homebuilders (30%) and home improvement companies (20%), housing technology (20%) like Zillow and Redfin. Rating:

• Good: Bar chart strong buy, new still cheap, diversified holdings hybrid, low mortgage rates great for homebuilding portfolio.
• Schwab: $10,000 growth to $11,245 after 12 months, top 25% among peers.
• Holdings: Combines residential REITs (30% ) homebuilders (30%) home improvement companies (20%), housing technology (20%).
• News: Very positive, High growth & income potential
• Sy grade: A
• Buy? Yes.

Bottom line:

All three are set to benefit from low rates and a move from cities to suburbs and from apartments to houses. And which one do I prefer? Homz. I like its mixture of residential REITs, homebuilders, and tech. Actually, I bought all three.

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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in Pasadena, California.

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He has 50 years of experience in defending taxpayers audited by the IRS, FTB, EDD, BOE and other governmental agencies. He is publishing a book on his expertise – “HOW TO AVOID OR SURVIVE IRS AUDITS.” Our readers may inquire about the book or email tax questions at vicsy@live.com.

Victor Sy, CPA, MBA (retired)
Victor Sy, CPA, MBA (retired)

Victor Santos Sy, MBA. CPA (Retired) Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation. * * * He retired after 50 years of defending taxpayers audited by the IRS, EDD, BOE and other governmental agencies. He published a book on “How to Avoid or Survive IRS Audits” that’s available at Amazon. Readers may email tax questions to vicsy@live.com.

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