Alpine's Lieber Still Hopeful on Housing

Hurricane Katrina could buoy plummeting homebuilding stocks and REIT funds.

The average REIT fund is down 6% over the past month, according to Morningstar, and the Philadelphia housing sector index has fallen more than 9%. The severe downdraft has got real estate investors on edge, wondering if the end of the so-called housing bubble is finally at hand.

One voice of calm in an otherwise worried marketplace is Sam Lieber, portfolio manager for the $900 million (EUEYX Quote)Alpine U.S. Real Estate Equity fund. Lieber says the latest pullback is not unusual and certain sectors could even benefit from rebuilding projects associated with Hurricane Katrina.

Lieber's fund, which is heavy on homebuilding stocks like KB Home(KBH Quote), Lennar(LEN Quote) and Toll Brothers(TOL Quote), has lost over 10% in the past month, but is still up more than 11% this year.

TheStreet.com checked in with Lieber to get his views on housing bubbles and hurricanes.

REITs and homebuilders have been hit pretty hard in the past month. What's behind the big downturn?

You have to remember that these stocks have had a very good run. From March through the end of July, REITs and homebuilders rose 26% and 43% respectively. So to see a pullback makes sense. The stocks were due for a correction.

On top of that, there are general fears about higher interest rates. Obviously, that hasn't happened yet, but the strong Aug. 5 employment report hit the stocks too.

Fed Chairman Alan Greenspan alluded to a housing bubble recently, which also didn't help real estate stocks. What's your position on the so-called bubble?

The world is certainly awash in liquidity. There are significant amounts of investment dollars looking for a home in real estate as well as a huge amount of investment dollars looking to finance real estate. Our view is that the world has not changed. There may be less of a cushion now, but overall there is less of a cushion in the economy whether it's the government or current account deficit.

In terms of the risk premium in housing, Greenspan is certainly correct that low returns in other areas have pushed investors to take on more risk for incremental return.