Carla Pasternak, editor of Street Authority’s High-Yield Investing, calls it “the most dramatic turnaround in U.S. history.” And millions of people across the country are reaping its benefits, increasing their net worth, while reducing the stress point that used to cause many to lose sleep at night.

I’m talking about the clear recovery taking place in the residential and commercial real estate markets.#-ad_banner-#

The latest read on the S&P/Case-Shiller Home Price Index, a leading home-value index that tracks prices in 20 residential markets, showed that home values rose 4.3% in October 2012 from the previous year, ahead of estimates looking for 4% growth. That follows the trend that has been in play for the past 12 months, with home prices showing steady gains through most of the year.

And sure to fuel the rebound in home prices is the recent settlement of a massive lawsuit against 10 major U.S. banks and mortgage companies brought by the federal government. Not only is the settlement value of $8.5 billion barely a glitch in the earnings power of these major banks and mortgage companies, but removing the uncertainty of a lawsuit will likely provide a boost of confidence and drive higher lending volumes. Both of these factors will benefit home prices.

If you’re a regular reader of StreetAuthority.com articles, then you may have seen Nathan Slaughter, editor of Scarcity & Real Wealth, declare that “Now is the Greatest Opportunity in a Generation to Buy Real Estate.”

But as every homeowner knows all too well, investing in housing is risky and expensive. Broker transactions can easily hit 5% of the value of the home, and when it’s time to sell, homeowners are frequently confronted with the reality of anilliquidasset that’s difficult to unload. These two factors weigh very heavily on the total return of any housing investment.

That’s why I am such a big fan of private-equity firms when it comes to investing in the housing market. These companies stand to reap huge gains from rising home values and higher lending volumes, which will likely decrease delinquency rates and increase the value of distressed loans and fixed-income assets.

[See also: The Easiest Way to Become a Landlord in 2013]

And my favorite pick from the group is Blackstone (NYSE: BX). The company is a major player in the private-equity space and the largest private real-estate owner in the United States. Beyond residential and commercial real estate, Blackstone also operates in distressed debt, hedge fund solutions and financial advisory.

The stock has already been rallying on the housing rebound. While home-owners and the market have been cheering the 4.3% rebound in home prices in the past year — certainly great news in its own right — Blackstone has been ripping higher, posting a market-smashing 33% return in the past six months. Take a look at the big gains below.

But even though shares are up sharply, there is still plenty of room for Blackstone to move higher. In fact, I think this stock can easily double.

That’s because Blackstone is insanely undervalued.

In just the past 90 days, the full-year 2012 estimate has seen big upward revisions, jumping 11% to $1.63 a share. The full-year 2013 estimate is even more bullish, with analysts projecting 30% earnings growth to $2.11 per share. Taking the full-year earnings estimate of $2.11 a share for 2013, Blackstone trades at just eight times forward earnings, a big discount to its five-year average of 12 times and an even bigger discount to its peer average of 18 times. If Blackstone simply traded with the same valuation as its peers, then shares could more than double to $38.

But it’s not just about valuation. Blackstone is also razor-focused on cashing in on the rebound in housing to grow earnings. The company recently accelerated purchases of single-family homes as prices increased faster than it expected, deploying $2.5 billion from a $13.3 billion fund raised last year to invest in 16,000 homes to manage as rentals, according to Bloomberg. Now that’s what I call an investment in housing.

Sweetening the deal a little more is the stock’s solid 2.4% dividend yield, safely ahead of the benchmark 10-year Treasury note‘s 1.9% yield and the S&P 500’s 2% yield.

Risks to Consider: The big banks have been conservative lenders in the past four years. Although this trend is improving and should improve more due to the recent mortgage settlement, lower lending volumes would continue to weigh on the housing recovery and Blackstone’s earnings growth.

Action to Take –> Anytime I see two of StreetAuthority’s experts make such a bold statement, especially when it comes to the beleaguered housing sector, I take note. And Blackstone is uniquely positioned to benefit from the growing recovery in housing. The stock has great earnings, an amazing valuation, and while the yield is perhaps a little low for Carla to consider for High-Yield Investing, it’s still solid. If shares simply traded with the same valuation as its peers, then Blackstone could jump to $38 share, more than 100% from current levels.

P.S. — StreetAuthority’s High Yield Investing is dedicated to bringing investors the highest-paying and most stable stocks, bonds and funds on the market. Click here to learn how to profit from some of our latest income investing picks.