John Paulson: Housing Prices May Soar 10 Percent

Wednesday, 05 May 2010 09:19 AM

By Dan Weil

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Hedge fund star John Paulson, who made his fortune betting against the housing industry during the real estate meltdown, now sees things somewhat differently.

In a conference call with investors, Paulson said that earlier in the year he saw a chance for a double-dip recession.

“I'm not concerned about that at all today," said the man whose dealings with Goldman Sachs led to government charges of fraud against the banking titan.

A V-shaped recovery is more likely, he says. "The outlook for 2011 could be very strong," he said, according to MarketWatch.

Paulson’s also bullish on the housing market, saying home prices already have stabilized and may climb 8 percent to 10 percent next year.

Paulson voices optimism about the credit markets too. He’s not worried about the huge amount of corporate debt that needs to be refinanced in coming years.

"That is a concern to some investors. It's not at all a concern to me," Paulson said.

"There's so much demand for debt. (There’s a) voracious appetite for credit," Paulson said. He notes that debt offerings are vastly oversubscribed.

Renowned economist Robert Shiller isn’t so confident about housing and the economy.

“Home prices have been going up for nearly a year now,” he told The Motley Fool.

“Normally we could extrapolate that kind of upward trend. But I think we're in a very unusual circumstance. I don't trust the trend that we have. I'm worried that it might get reversed.”

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