The Real Deal New York

Goldman, Blackstone turn bullish on housing

December 29, 2011 03:10PM

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Goldman Sachs, the Blackstone Group and several other notable investors have turned bullish on the U.S. housing market, the Wall Street Journal reported, buying up shares of home building companies, like Pulte Group, Beazer Homes and Hovnanian Enterprises. Those stocks are up 30 percent since the end of the third quarter, according to Dow Jones, far outpacing the 10.5 percent increase recorded by the Standard & Poor’s 500.

In a recent report, Goldman said it expects home prices to decline 3 percent next year, before gaining 30 percent — not taking inflation into account — through 2022. Meanwhile, a Blackstone hedge fund said it is banking on the fact that “the inventory picture has cleared meaningfully.” Inventory fell 5.8 percent in November to its lowest level in 2005.

Investors also believe that pent-up housing demand will be converted into home sales, as record-low mortgage rates ADD LINK and improving affordability finally convince hesitant buyers to take the plunge and make a purchase.

Still, the Journal noted that many pessimists still lurk among investors. Bears say sustained high unemployment and the backlog of foreclosed homes waiting to be unleashed on the market will limit growth for years. [WSJ]

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