Investors of every ilk are rushing to take advantage of present real estate conditions, “buying up companies and assets in every part of the housing supply chain”, such as foreclosed homes, undeveloped land, home builders and building parts manufacturers, according to a report in CNN Money.
This surge in investor buying activity, which includes private equity firms, hedge funds and rich individual investors alike, is being driven by a growing realization that the window of opportunity could be about to slam shut as market conditions improve.
Brad Geisen, CEO of Foreclosure.com, tells CNN Money that many investors believe that the days of rock bottom prices and a well-stocked inventory will be short lived.
“No one knows how long it will last,” explains Geisen. “So these investors are trying to buy as much as they can right now.”
The Blackstone Group is a classic example of an investment firm scrambling to take advantage of the situation while it still can. Last year, it spent around $2.7 billion on the purchase of some 17,000 foreclosed homes, which have since been turned into rentals. Even now, the firm continues to snap up thousands of homes each month while it still can. Meanwhile, Pine River Capital Management’s Silver Bay Realty Trust has recently jumped onto the bandwagon, buying up more than 2,500 homes in some of the country’s worst-hit markets since it went public last December. The trust has plans to buy another 3,000 homes, according to CNN Money.
Investors are also seeing opportunity away from distressed homes. John Paulson, manager of the Paulson & Co., hedge fund, is betting on the new home market picking up steam in the coming months and years, buying up swathes of undeveloped land in states like Arizona, California and Nevada. So far, the firm has snapped up enough prime real estate to accommodate 25,000 homes.
Finally, investors are also looking to the stock market as a way of cashing in on housing, with publicly traded home builders like KB
Great article Mike. The window has already begun to close pretty quickly in markets like Atlanta. There has already been so much buying that it has altered the market dynamics drastically in the past few months. The real bottom for prices ended around the summer of 2012. the best prices were seen only in 2010 and 2011.