Tags: hedge | funds | bet | housing | recovery

Hedge Fund Heavies Bet on Housing Recovery

Friday, 30 Dec 2011 11:19 AM

By Dan Weil

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Several signs have emerged that the housing market has bottomed, and major hedge funds are acting on those signals by loading up on housing-related investments.

The group includes Caxton Associates, SAC Capital Advisors, Avenue Capital, and Blackstone Group, The Wall Street Journal reports.

In addition, research firm Zelman & Associates, which formerly held a negative view on housing now forecasts a recovery, and so does Goldman Sachs.
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"We turned bullish on housing. A rebound is coming," Andrew Law, chief investment officer at $10 billion hedge-fund firm Caxton, tells The Journal. He anticipates an increase in home prices and construction next year.

homes200getty1.jpg
(Getty Images photo)
As for the positive signs, on Thursday the National Association of Realtors (NAR) reported that the number of Americans signing contracts to buy previously-owned homes in November soared 7.3 percent from October to the highest level in 19 months.

And last week the NAR announced that used home sales climbed 4 percent last month.

Hedge funds aren’t the only ones jumping into housing investments. The Dow Jones Select Home Builders Index has risen 30 percent this quarter, compared to a 10.5 percent increase for the Standard & Poor's 500 Index.

“It looks like [home] buyers are becoming more confident and are attracted to record-low mortgage rates,” Aaron Smith, a senior economist at Moody’s Analytics, tells Bloomberg. But “activity still looks depressed by historical standards.”

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