Where the Best Real Estate Values Are

Interest rates might not be dragging down activity in the housing sector anytime soon, Citigroup Global Head of Real Estate Thomas Flexner said Tuesday.

"I happen to think that people are coming away from this data today being much more invested in a strong housing recovery. I'm not sure if all the data support it yet. It's very early on," he said. "Remember, we've had a supply-constrained market for the last few years."

Stocks closed higher, erasing most of their losses from the previous day's selloff, as better-than-expected economic reports eased worries over a credit crunch in China.

(Read More: Dow Ends Up 100, S&P Rallies 1%; All S&P Sectors End Higher)

On CNBC's "Fast Money," Flexner noted a lack of new construction in real terms and the creation of a new institutional investor class that has been buying "tens of thousands of new homes" to turn into rentals.

That made the outlook positive for the real estate market, he added.

"I think this is great news," Flexner said. "I mean, it really does show an inflection point, but it's still fragile."

Fears that rising interest rates would provide a drag on the sector might be premature, he added.

"I don't know that there's a precise tipping point anymore because it's also a function of what the price point on the house is," he said. "I think that we are quite a bit away from having the interest rate itself become a negative for the housing market."

Flexner noted that the specter of rising rates could spur some activity, citing its effect on consumer psychology, but didn't flag it as a major concern.

"It may be accelerating some demand that should actually occur further out, but I still think you've got to be very careful in investing too much in this data," he said.

Flexner did point out that aggressive lending in a low-rate environment could be putting banks in riskier territory.

"We're getting to the point where the underlying standards are starting to fray a bit," he said.

Flexner also identified where the best plays in real estate were these days.

(Read More: 3 Sectors to Weather Rising Rates)

"I would say the best values at this point are in the very best cities," he said. "There's only once place in the United States where you can, you know, induce a Russian billionaire to pay $8,000 a (square) foot. That's in this town."

Flexner said that coastal cities and 24-hour-a-day cities like New York were the best bets.

"Those are the best long-term values because demand is sort of perpetual," he said.

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Trader disclosure: On June 25, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Tim Seymour is long BAC; Tim Seymour is long SBUX; Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long C; Karen Finerman is long JPM; Karen Finerman is long TGT; Karen Finerman is long GOOG; Karen Finerman is long M; Karen Finerman is long SPY; Karen Finerman is long MDY PUTS; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long MSFT; Guy Adami is long AGU; Guy Adami is long NUE; Guy Adami is long BTU; Guy Adami's wife, Linda Snow, works at Merck; AS OF 6/18 Brian Kelly is long US dollar; Brian Kelly is long Canadian dollar.