John Paulson: 'Best Time in Our Lifetime' to Buy a House

Friday, 19 Jul 2013 08:23 AM

By Michelle Smith

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Hedge-fund manager John Paulson proclaimed that "this is probably the best time in our lifetime to consider buying a house" because of the combination of low mortgage rates and tax deductions on housing.

Yes, that advice came from the same John Paulson who reportedly reaped about 600 percent returns in 2007 from shorting sub-prime mortgages.

In 2006, Paulson realized the housing market had peaked and he made billions on the market's decline, CNN Money reported that he explained at a CNBC investment conference.

Story continues below video.



Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

But times have changed and Paulson sees a housing market near the bottom with substantial room to move higher.

Paulson is so bullish on housing that he advises those with houses to buy another one.

"You won't make returns that good by investing in me," he told the conference.

Paulson has been excited about the housing market for some time now. During a speaking engagement at the beginning of the year, Paulson declared a “strong recovery” in housing.

Rising prices and low inventory are driving the "most positive change in housing since the Lehman crisis" he told CNBC.

"This is probably the best time in our lifetime to consider buying a house." Low interest rates plus tax deductions equal affordability, Paulson explained.

But interest rates are creeping up and many fear it will have a negative impact on the housing market.

Those concerns are unjustified because houses in most of the country are still affordable, according to Freddie Nothaft, vice president and chief economist at Freddie Mac.

“So while rising interest rates will reduce housing demand, rates would have to increase considerably more before the reduction in demand for home purchases would be substantial. Nothing in the recent trends suggests that we need to fear a major slowdown,” he said.

Nothaft portrays a strong sense of confidence that “a gradual rise in interest rates will not derail the recovery.”

Paulson is of like mind, also dismissing concerns that interest rates will have a cooling effect, CNN Money reported.

Actually, the hedge fund manager believes that individuals who get a fixed rate mortgage now will have an ideal inflation hedge in place.

Paulson also sees huge potential in real estate. He believes the lack of inventory will pressure homebuilders to get to work and he is betting on it with major purchases of undeveloped land in key areas.

"I think we're just at the beginning of the recovery. I think it will continue for four to seven years," Paulson told the crowd. "It's not too late to get involved.”

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

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