What they said: The Real Deal 5th Annual Forum

October 21, 2009

by Scott Sambucci


Much to my dismay, nothing remarkable or shocking… Instead the panel provided lucid and realistic analysis.

If you missed it, The Real Deal Distressed Opportunities Forum hosted last week in New York City included:

Joseph J. Sitt, Chief Executive Officer, Thor Equities
Miki Naftali, President and CEO of EI AD Us Holding, Inc.
Nouriel Roubini is the co-founder and chairman of RGE Monitor
Mark Zandi is chief economist and cofounder of Moody’s Economy.com
Brian Sullivan, Anchor, FOX Business Network
Pam Liebman
, President & Chief Executive Officer, The Corcoran Group Inc.
Dolly Lenz, Real Estate, Vice Chairman Prudential Douglas Elliman

I paid particular attention to Roubini and Zandi and their perspectives on where we are in the housing and economic cycle. Here are couple of highlights from their comments throughout the panel discussion:Nouriel Roubini:

  • We’re reaching the end of the recession right now.  Sees a U-shaped recovery with the possibility of a W-shaped recovery.  Nothing new here.  He’s been espousing this point of view for several months.
  • The gap between housing supply & demand is “too large” and he sees aggregate housing prices falling another 7-10% in the next year.
  • The current uptick in the housing market has been supported by the first-time home buyer tax credit, but the shadow housing inventory and excess capacity will be the cause of lower price levels.
  • The labor market is witnessing falling hours for 3 millions jobs, when added to the 7 million jobs lost, adds up to a much higher unemployment/underemployment figure.

Mark Zandi:

  • Agrees that the economy is over and that we are in expansion mode.  We’re in recovery mode with business decreasing total costs including labor, which means that no one is hiring yet (evident from unemployment numbers released in recent months).
  • Feels that New York City is doing “incredibly well considering it is the epicenter of the financial crisis.”
  • With regard to housing, prices are based on inventory.  If inventory continues to rise, prices cannot rise in tandem.  Once inventory levels fall, prices will stabilize.   [Note: we’re seeing that in the short run in our data.  Overall national housing inventory levels have been falling providing price stabilization so far this year.]
  • In the intermediate term, he sees more housing price declines on a national basis and shared an interesting statistic – 4.5 million first mortgage loans or 53 million are either 90 days delinquent or in the foreclosure process.

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