Some big money is walking back into real estate this year in the form of land sales, new housing developments and home builder IPOs.
“Hedge funds and private equity firms have been 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.
Some interesting developments are laid out in the article. Hedge fund Paulson & Co is making a huge bet on land, buying up land in California, Arizona and Nevada – enough to build 25,000 homes. Blackstone Group last year bought 17,000 single-family homes that had been through foreclosure and has plans to continue these purchases in 2013.
Several home builder IPOs are expected this year, as we discussed here before. Tri Pointe Homes, which builds homes in California and Colorado, raised $232 million through its IPO last week, marking the first public offering by a home builder in nearly a decade.
And another sign of increasing investor appetite is in the price of home builder stock, which has been climbing lately. Pulte Group, KB Home and Lennar – three of the nation’s largest home builders – all have had shares trading at 52-week highs.
The window of opportunity in housing has clearly opened for investors. But it won’t be open for long. As more money rushes in, the chances of getting rock-bottom prices become scarcer.
All of this means two things: The housing market is picking up and investors know it. And we can expect a lot more housing inventory coming down the pike in years to come.
Even if you’re not in the market for land or a new home, these things will likely impact you in some way by impacting the entire sector. When investors see a market healthy enough to jump in, then it’s generally a good sign. For buyers, this means more supply to keep up with demand. For sellers, it means an overall stronger market that will pick up in value.
If you are looking to pick up some land this year, then you better get to it.