All We Have To Fear Is Wishful Thinking

Home builders and real estate investors seem to have a bad case of premature enthusiasm, sparked by the hope that everything is better now that we’ve avoided a global financial melt down.  Many economists and Wall Street analysts now believe we’re likely to see a significant downturn again later this year, and that the economy, real estate and banking all have a long, hard slog ahead. Why?  Well read on….

2009: The Year Lenders “Recapitalize to Survive”

If 2008 was the Year of Denial, 2009 will be the Year of Recapitalization.  How much recapitalization? Investment bank Keefe, Bruyette & Woods projects that United States Banks might need as much as an additional $1 trillion in capital, according to the April 24, 2009 edition of the New York Times.

Housing Prices, BB’s and the Bottom of a Bucket

How long will it take before housing prices go up again? In reply to that question, I typically respond, “It will probably take a while longer than most people think and will look a lot like the bottom of a bucket.” When I’m asked why, I’ll usually ask them a question in return: “How long would it take to pick up two million BBs off the beach?” Whomever I’m speaking with usually gives me a puzzled and slightly annoyed look and says, “What’s that got to do with the bottom of a bucket, or, more importantly, when the real estate market will hit bottom or what the bottom will look like? And, for that matter, what’s the bottom of a bucket got to do with anything, anyway?”  Its been the best way I can think of to explain my view of the housing market.

CMBS Tranche Wars: The Next Wave of Zombie Real Estate

Remember how the residential real estate markets froze-up beginning in late 2007?  Well, the same thing is now happening in commercial real estate.  Read on….

Where’s the Bottom? March of the Zombies

Several months ago I earnestly asked a friend of mine who is a land economist, “Where’s the bottom of this housing market?” and he promptly answered, “I don’t know.”  However, being persistent, I asked again. This time he answered, “Well if you could tell me how much zombie housing is out there, I could make an intelligent guess.”

Hey Buddy, Wanna Buy A Note?

Hey buddy, wanna buy a watch?   It’s the refrain that immediately conjures up the image of a shadowy figure in a back alley opening his trench coat to reveal a selection of watches hanging from the inside of his coat.  Not exactly the most progressive way to sell watches (or anything else for that matter), but it’s not that far off from the way that most lenders have been marketing their non-performing commercial real estate loans this year (commonly referred to as notes, as in note and first trust deed).  To be more accurate, lenders have been quietly offering their non-performing loans primarily to a small circle of good customers and business relationships.