McMansions and Pickup Trucks

by JT McGee

A few days ago the Wall Street Journal ran an article on pickup truck sales. According to the article, pickup trucks run hot and cold based on the state of the housing market.

As more homes are built, more trucks are required to transport materials and people to building sites. Check out the chart below to see the correlation:

It’s Not Perfect

The relationship between home building and pickup sales isn’t perfect. I would think that housing construction and pickup trucks are both buoyed by cheap and available credit. So there’s another factor at play here – cheap credit makes it possible for more people to buy more cars and more homes.

For automakers, a rebound in housing is nothing but positive, however. The same article notes the reality of auto manufacturing – the money is in the trucks, not cars.

Housing starts are at 4 year high.

Recently, housing inventories plunged to a new low.

Housing Recovery!

I still think we’re a long way away from true housing recovery. While it is true that home prices are ticking up in select markets, there are a bazillion of homes underwater. Actually, 22.8% of homeowners are underwater, but these stats are estimated, so make of it what you will.

Anyway, there are probably a ton of people who, once their home is worth more than their mortgage, will want to move. That brings more inventories to market with every single uptick in the housing market. My favorite play on the housing market is still in auto manufacturers because the economics of the business is just so much better. We don’t have enough cars, but we have plenty of homes. As inventories drain, new construction will begin, and those fat, fat truck profit margins will come back to the North American auto market.

Cheers for recovery!

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