Last week Warren Buffet will rebound in 2011, today Sam Zell (another billionaire) said essentially the same thing. Zell speaking with Bloomberg says the recovery will start at year end and gain strength in the middle of next.
The concern I have is not the financial markets now, it is the relationship between the markets and the government. The unknown regulatory hurdles and expenses are what concern me going into the coming year.
Everyone is basing the real estate recovery on the general economic recovery, but we forget that the economy was driven by real estate growth and development between 2004 and 2006. So now we are back 7 years before the general economy was doing positive things.
Since that time we have added many more challenges from the government in the form of regulations and taxation which will hamper future economic recoveries. Add into that all of the soft landing programs that have kept us from hitting the bottom in residential real estate and it is hard to forecast accurately when the recovery will really start.
Zell made his fortune investing in real estate, and sold Chicago-based Equity Office Properties Trust to Blackstone Group LP in New York for $39 billion in 2007. He said in yesterday’s interview that the U.S. housing market will start recovering toward the end of 2010 and strengthen in the middle of 2011.
Now chairman of Equity Residential, the largest publicly traded U.S. apartment owner, Zell said real estate investment trusts will have enough cash to boost dividends in the future. Almost 70 percent of REITS tracked by Morningstar Inc. have cut or eliminated their payouts since the second quarter of 2008 as commercial real estate values plunged.
{ 8 comments… read them below or add one }
Hmm…..interesting. Of course, I would love to see the real estate market bounce back as quickly as possible, but just as I’ve heard Zell talk of real estate recovery, I’ve heard other industry professionals say we still have a long way to go–some think as many as two years. Anyone else have a thought?
an add on to my previous comment–I suppose nationally it’s hard to tell, but each city and market is in a different stage.
Great to hear that the big boys
are predicting recovery sooner than
most think.
Thanks for the value!
Real Estate is hyper-local. Every market is different. Phoenix has already hit bottom and is starting to recover. We have had marginal price increases for 8 straight months.
While I agree that real estate, generally, is local (although there are certainly regional trend differences), within individual markets there isn’t enough discussion of “submarkets”. In my market, which is heavily a NYC second home market (Sullivan County NY Catskills), there has been a strong pickup in activity in the affordable to moderate range, for smaller, more modest homes, but the upper end, McMansion trophy house on steroids market is as dead as a doornail.
The Sullivan County Catskills are about 2 hours from the West Side Highway in Manhattan. Traditionally, we have been a resort community and recreational mecca for those wanting to swim the Delaware River and beat the heat.
Our real estate market consists, in good measure, on second home sales from the Metro area. Spending on second homes here has been somewhat stagnant, but as a previous writer noted, a small portion of our second home market has increased from last year at this time.
The issue of Natural Gas Drilling will continue to impact real estate in the Catskills. Be sure to be aware of the possible implications.
Well I’m in Phoenix too and although we’ve seen some prices going up, my once million dollar home in Scottsdale is still worth maybe 700K, and will need to climb another almost 50% for me to break even. Oh well, you have to live somewhere I suppose.
I just have a tough question: I owe $292K on a house in Boca Raton , FL that is now worth probably $260 realistically. Based on two extreme scenarios ( grim and rosy) how long would it take me to break even?
THanks
{ 1 trackback }