Big Money Bets on a Housing Rebound – New York Times 12-08-12

Salient to Investors:

Knowledgeable, cash-rich investors are leaping headlong into buying houses. Private-equity giants and hedge funds have spent billions of dollars on thousands of foreclosed single-family homes. Jade Rahmani at Keefe Bruyette & Woods said they have raised as much as $8 billion to invest The Blackstone Group has spent more than $1 billion to buy 6,500 single-family homes in 2012, The Colony Capital Group has bought 4,000.

However, Och-Ziff Capital is already starting to sell the single-family homes it bought since the recession began.

Jay Leupp at Lazard Asset Mgmt said this will be a workable business as a REIT for at least 3 to 5 years

Investors are a rising force in the housing market. Even if their purchases slow, they are now sitting on thousands of homes and have positioned themselves as the new landlords of thousands of Americans.

Since September 2008, an estimated 3.9 million families have lost their homes to foreclosure. Nationwide, home prices have fallen a third from their peak in 2006.

Green Street Advisors said demand for single-family home rentals has always been there, and represents 33 percent of home rentals

Bob Curran at Fitch Ratings said that until now, most rentals were handled by small-time landlord-entrepreneurs who owned five or 10 houses.

Industry experts say the potential profits are enormous and compare the current home market to the commercial real estate market after the savings and loan bust of the late 1980s and early 1990s.

Taking home investment entities public has often been a sign that the big money has already been made.

Richard Anderson at BMO Capital Markets said the American dream to own and not rent a home is not changing anytime soon.

Read the full article at http://www.nytimes.com/2012/12/09/business/financiers-bet-on-rental-housing.html?nl=todaysheadlines&emc=edit_th_20121209