Real Estate Prices may Bottom-Out Soon
Seasoned foreclosure and real estate investor (and billionaire) Sam Zell predicts that the Single-Family real estate prices will have fallen as low as they can go by the end of Q1, 2009.
In addition to his prediction, Mr. Zell reminded Bloomberg television viewers in an interview on “Fannie, Freddie & Sub-Prime Crisis,” that even as foreclosures are on the rise and housing prices drop, there is a light at the end of the tunnel. What could possibly be so great about the current market slump, you might ask? Mr. Zell pointed out the correlation between housing price drops and housing affordability; as housing prices go down, the pool of people who can afford to buy real estate expands. That being said, Mr. Zell is not currently investing in real estate, claiming that he cannot impact that market enough to see a large return; he believes the current real estate market is “fairly priced.”
“Aug. 21 (Bloomberg) — Billionaire Sam Zell said the housing market could start recovering as early as next year and he’s focusing on investing in debt rather than equity.
“‘We believe that the opportunities, particularly in difficult situations, are in the debt,’ said Zell, who made his fortune building the largest publicly traded office and apartment companies in the U.S. ‘We have been focused on, not only in real estate but in corporate, identifying debt situations where it is trading at a discount.”
“Early next year the U.S. may see the bottom of the single- family housing market, Zell, 66, said in an interview today with Bloomberg Television. ‘I think it will be relatively fragile as confidence builds and it will take probably another year for confidence to be completely returned.’
“Zell is focusing on debt as the real estate recession deepens. Existing U.S. home sales fell to a 10-year low in the second quarter and the median price for a single-family house dropped 7.6 percent. Record foreclosures have brought on more than $505 billion in capital losses and asset writedowns worldwide and companies that lent money to homeowners and repackaged the debt into securities saw those businesses falter.”
Read the full article, “Zell Focusing on Debt Investing While Awaiting Housing Rebound” by Sharon L. Lynch and Greg Miles, Copyright 2008 Bloomberg.com
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Tags: bank foreclosures, fannie mae, foreclosure homes, foreclosure investing, foreclosure news, foreclosure problem, freddie mac, Real Estate, real estate bubble, REO, subprime loan, Zell
