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Housing at Start of 'Real Recovery': Eli Broad

Tuesday, 25 Sep 2012 | 5:13 PM ET

The housing market is on the verge of a major recovery, billionaire philanthropist Eli Broad told CNBC’s “Closing Bell” on Tuesday.

Home Construction
Lee Coursey
Home Construction

Broad, who founded what is today KB Homes, said “It’s very clear to me that we are at the start of a real housing recovery.”

With interest rates at near record lows and home prices beginning to recover, “people are going to recognize that buying a house makes a whole lot of sense and home values aren’t going to come down,” Broad said. (Read More: Home Prices Rose in July in 20 Major US Cities: Case-Shiller.)

Broad also doesn’t expect interest rates to start rising for a couple of years, particularly with the U.S. economy only growing 1.5 to 2 percent.

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Some home-builder stocks also continue to offer pockets of value despite the sector's massive run up this year, Buck Horne, an analyst at Raymond James, told CNBC on Monday. He recommends Toll Brothers and PulteHomes. The analyst has a "neutral" on Lennar and an "underperform" on KB Homes. (Read More:Pockets of Value Remain in Home Builders: Pro.)

Broad is also optimistic that the uncertainty surrounding the U.S. “fiscal cliff” and Europe will dissipate next year.

“Hopefully, starting in 2013 we’re going to get more confidence in our economy and the future of Europe,” he said. But “until people get confidence and businesses get more confidence, they’re not going to be investing the way they should be,” he cautioned.

Broad expects a grand bargain after the presidential election to deal with the fiscal cliff, when a host of tax cuts expire and spending cuts kick in. After the election, “people in both parties will realize we have to end up with compromise and a grand bargain,” he said.

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