The spread between historically low interest rates and the money that real estate generates is "truly astonishing," Starwood Capital Group Chairman and CEO Barry Sternlicht told CNBC on Tuesday.
"You can buy assets below replacement costs still," he said in a "Squawk Box" interview. "You can finance them with positive leverage — meaning the cost of borrowing is much lower than the yield on the property."
Sternlicht pointed out, "Never seen it in my career. It's truly astonishing. This is the 'Goldilocks Period' for real estate."
(Read More: Housing Prices Climb; Market 'Clearly Recovering')
Starwood Capital, a privately held investment firm specializing in real estate, was formed by Sternlicht in 1991. It has assets of $22 billion under management.
Some of those assets are in residential real estate, he said. "In general, we've spent basically '08, '09, '10 buying residential lots across the country at really huge discounts to replacements costs," Sternlicht said.
He said he believes that home builders will be putting houses up on the lots in a multiyear recovery. "[A] couple million jobs will be created in the housing market," Sternlicht said.
For people looking to buy or sell a home, he predicted, "You're not going to see housing prices runaway. I think they'll continue at a really modest three to four percent annual growth now."
As for indirectly investing in real estate, Sternlicht said, "If rates move up you'll see capital flow out of REITs (real estate investment trusts). ... A lot of people parked capital in them thinking that these dividends are move attractive than anything else. And they understand an office center or a shopping center mall REIT."
(Watch: Hot Housing Play: Hotel REITs?)
But he added that he doesn't see rates moving much and he would not be moving out of REITs at this point.
—By CNBC's Matthew J. Belvedere; Follow him on Twitter