Monday
October 20, 2014

Investors Take Big Bite Out of Housing Market

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Investors Take Big Bite Out of Housing Market

Hedge funds and private equity firms are looking to cash in on real estate, “rushing in to buy up companies and assets in every part of the housing supply chain, including undeveloped land, homebuilders, foreclosed homes, and building parts manufacturers,” according to a recent CNNMoney article. 

"A lot of investors see a short window of opportunity where there's good inventory on the market at bottom market prices," says Brad Geisen, CEO of Foreclosure.com. "No one knows how long it will last, so these investors are trying to buy as much as they can right now."

Last year, the Blackstone Group spent $2.7 billion buying up 17,000 single-family homes in foreclosure to turn into rentals, and they’re continuing to snatch up thousands more homes per month. Pine River Capital Management’s Silver Bay Realty Trust went public in December and, so far, has purchased more than 2,500 homes in once hard-hit housing markets to turn into rentals. It plans to buy 3,100 more homes, according to its recent SEC filing. 

Hedge fund manager John Paulson is betting on big growth in home building and focusing on buying up undeveloped land in areas like California, Nevada, and Arizona, which were among the hardest hit in the housing crisis. Reportedly, Paulson & Co. have accumulated enough land in these states alone to build up to 25,000 homes. 

Also showing investors interest in housing: Stocks reflecting the housing market are soaring. Publicly traded homebuilder stocks like PulteGroup, KB Home, and Lennar have been trading near 52-week highs. Tri Pointe Homes, a single-family home builder in California and Colorado, raised $232 million for an IPO last week—the first homebuilder IPO since 2004. 

Source: “Big Money Betting Big on Housing,” CNNMoney (Feb. 4, 2013)

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