Those who’re more or less regular readers here might remember my prediction, made in the first week of the year. In a nutshell I said we’d look back a 2008 knowing it was the year the correction bottomed and began it’s long and ponderous U-Turn.
Sam Zell is a multi-billionaire — and real estate is definitely his forte. Well guess what? He thinks this spring will mark the beginning of the housing recovery.
I made this happy discovery over at David’s place. David says he wouldn’t bet against Sam either. He’s linked to a newspaper article quoting Zell from his CNBC interview.
Does this mean since Sam says so it’s happening? Uh, hellllloooo. Remember that pesky guy, Reality? Sam Zell has tremendous credibility, at least from where I sit. If I was gonna look for one guy to give me the heads up on real estate it’d be Zell by a mile. I’ve watched him for quite awhile — he’s simply the cream of the cream.
I write all this for a pretty reason. I was on the phone today enough to require two recharges. Over half of them at some point wanted to know why I keep saying the window is closing. These pages have enumerated those reasons ad infinitum. Instead of asking why I say it, ask yourself another question.
Does Sam Zell go live on CNBC saying, “I think the housing market this spring will begin its recovery phase.” if he doesn’t believe it, and hasn’t been convinced for his own reasons? Of course not. Could he be totally wrong, out to lunch? Yep. 
Wanna bet against his track record in real estate? His money — his billions have largely been made calling these market transitions and being ahead of the curve.
Heck, I’m tickled to death I’m on record here saying the same thing over two months ago.
Why does this all matter to you? It matters because THE WINDOW? SHE IS CLOSING.
If you’re in San Diego and need to sell yer stuff to take advantage of the growth regions — then sell yer stuff. Email me — Call me — Send a message via carrier pigeon — but you need to take your San Diego equity (Palo Alto this means you too!) and start the process that’ll get you Outa Dodge. You should begin this process around 4:30 yesterday afternoon if not sooner.
You can go to the Brown and Brown company site, or contact me from here. Remember, if you’re a San Diego income property owner our new local business model will save you a whole bunch of dead presidents. It’s already proving to be pretty attractive to local investors — that is if a two phone charge day is an indicator.
I realize I’ve been beating the timing drum lately. The evidence is beginning to indicate a potential for a recovery is plausible. We won’t have an opportunity like this for quite awhile in my opinion. The last time was over a decade ago.
Yet again, I’ll repeat the mantra — Time isn’t your friend when it comes to this window. Sell your high priced San Diego (heck, anywhere in California) property and Get Outa Dodge!
I’ve heard this song far more while on a baseball diamond than a dance floor. When umpiring it was played whenever I raised an arm towards the bullpen and tapped it, signaling what pitcher was to relieve the one getting bombed. Let’s all have a positive thought, and enjoy a trip in the Way-Back Machine. I nominate it as the theme song we should play as the current Market Correction leaves us — whenever that may be.
Related posts:
- The Truth — ‘They’ Don’t Have A Clue When This Correction Will End
- Getting Out Of A Dead Market — The Case For Taking What’s There And Movin’ On
- The Current Real Estate Correction — When’s The Recovery?
- Real Estate Investing For Retirement — Timing The Market — And Fools
- What’s a Good Deal These Days? Plus — a Solution
About BawldGuy
Zell owns Equity International and now Tribune. Both have tremendous self interests in having the housing market turn sooner rather than later. Zell is IMO just talking his book. Just as a test try to reverse engineer his optimism. There has to be some datum or at the very least some positive change in some trend somewhere that justifies this call? Can you find it? I cannot find any material change in any associated indicator that doesn’t point down. most are trending even further negative even faster.
Remember also Mr. Zell is also looking to sell of some really expensive CRE from Tribune as part of his financing the deal. He needs for prices to stabilize this year in order to not look foolish for the purchase.
Robert — First of all their are signs of a potentially approaching bottom. They may be the makings of an imminent recovery, or a mirage.
I’m hanging with Sam on this one, as I think his track record on real estate market predictions is not only incredible in scope, but backed up by his investment history (based upon his predictions).
He didn’t become a multi-billionaire pushing books.
Great analysis, as usual, Jeff.
Sam has been in the real estate game for a long, long time. His prediction that the residential market is going to improve will not, imo, have much impact on Tribune’s commercial dirt.
In addition, if I recall correctly Sam still has his hands and some money in Equity Residential, the big apartment REIT. Since apartment values usually decline in a solid housing market (and vice versa), a pickup in house sales may actually not be a good thing for Sam, at least in that part of his empire.
Is Zell self-serving at times? Heck yes. But the Grave Dancer has a track record in real estate that anyone would be jealous of, topped off by the sheer genius of the EOP/Blackstone transaction.
All right, back to work and my own blog now.
Thanks David — Zell would have to have experienced a catastrophic IQ drop to think anything he says (if he didn’t believe it) would make a drop in the ocean’s difference in the future of a real estate market.
He’s a lot of things. Fool isn’t one of them.
First of all their are signs of a potentially approaching bottom.
Which signs? I thought we were all pretty much looking at the same data. Resale and new homes accelerating deterioration. M-o-M price declines far greater than moving averages (quarter or year). Then there’s the lending environment; resets, foreclosures, investment loans spreads and downpayments, etc. Inventory. And the general economy; sales tax receipts, dollar exchange, energy, inflation.
Especially since we all (you, me, Zell) are implying a U shape bottom rather than a V in order for a spring prediction of an investable bottom we would need to see at the very least some of the indicators stabilizing. I’m not in Zell’s league, heck I’m not even worthy of polishing the esteemed Bawld guys’ cranium but I just don’t see it yet.
I’m pretty much in the capital preservation camp right now. That’s why your “get outta Dodge” and “buy the fly(overs)” strategies are so attractive.
You have to ask; what about Spring 2008 is materially improved from 2007? I don’t see it (yet) and believe me I’m looking for the sunshine and not the rain clouds. I’m glad employment is holding up although moving average new claims are worrisome for what is a lagging indicator. That’s one stable indicator and dozens down. I trust Sam and I trust the Bawld One. “Trust but verify” as someone who I am sure is a mutual hero might have said.
Robert — God bless our ‘mutual hero’.
The data I see, and frankly, what Zell has alluded to also, is the shrinking builder inventories, REO sales, short sales, etc.
Folks lacking confidence in the future of the general real estate market don’t buy real estate period.
The fence sitters are beginning to jump off on the side of property acquisition. It may indicate what I’ve been saying is correct, or mean nothing whatsoever, making you a seer.
I say we’ll know something solid by the end of the year.
>…heck I’m not even worthy of polishing the esteemed Bawld guys’ cranium but I just don’t see it yet.
Sell that to someone who’s buying.
Robert — God bless our ‘mutual hero’.
On a very clear day he looks down on me from 10 miles to the east.
The data I see, and frankly, what Zell has alluded to also, is the shrinking builder inventories, REO sales, short sales, etc.
The new home sales and cancellations and months of new supply inventory are not even holding. Ref: http://calculatedrisk.blogspot.com/2008/02/new-home-sales-cliff-diving.html where we read: “…January 2008. This is the lowest sales for January since the recession of ’91.”
The fence sitters are beginning to jump off on the side of property acquisition. It may indicate what I’ve been saying is correct, or mean nothing whatsoever, making you a seer.
This is what I don’t see. Sales are not even stabilizing nevermind increasing.
I say we’ll know something solid by the end of the year.
Absolutely but the end of the year is hardly the spring stabilization Zell is predicting.
…heck I’m not even worthy of polishing the esteemed Bawld guys’ cranium but I just don’t see it yet.
Sell that to someone who’s buying.
Come on. Take a little credit for yourself. You earn a living doing what you do. I merely invest a portion of my money in the same area.
Robert — Some of the same builders who celebrated my very existence 90 days ago won’t return calls. They’re selling homes at retail today off the street to walk-ins.
Same thing for REOs. I’m getting first hand reports from our state to Florida. Of course some are more active states than others, but you get the point.
It’s happening.
>Absolutely but the end of the year is hardly the spring stabilization Zell is predicting.
I’ll let you quibble over a few months. What’s a quarter or two between friends?
[B]uilders who celebrated my very existence 90 days ago won’t return calls. They’re selling homes at retail today off the street to walk-ins.
Same thing for REOs. I’m getting first hand reports from our state to Florida. Of course some are more active states than others, but you get the point.
I do now. Thanks. I also agree that REO pricing is remarkably firm in every market I am following including the bubble zones. Just to present some balance; my sister just closed on a combination rental/vacation property on Cape Cod and I didn’t discourage her based on my analysis of her goals of acceptable cash flow and personal use and capital exposure/potential.
Three San Diego agents have told me they’ve consistently seen investors walk away empty handed for foreclosure sales. The homes sold to owner/users willing and able to pay more. Yet another brick in the wall.
Layman perception goes a long way — good, bad, or ugly.
Nice call if you really did call the same thing two months ago. I wouldn’t bet against guys like Sam Zell who are governed only by reason and logic. The guy is an advanced investor and businessman.
Thanks Allan — The documentation of my prediction is in the first link of the post. (Jan. 5th)
Saying Zell is an advanced investor/businessman is like saying Michael Jordon could dribble well.
Thanks for comin’ by Allan — don’t be a stranger.
Three San Diego agents have told me they’ve consistently seen investors walk away empty handed for foreclosure sales.
I’ll assume you meant “investors walk away empty handed FROM foreclosure sales” and it was just too much KC BBQ sauce that caused your fingers to slip.
I will concede that the investor versus owner occupant competition for REO properties is no contest in favor of the OO for now. I judge that good for “gettin’ outta Dodge” on the last stagecoach but don’t see what it says about the national investing climate for buying anytime in 2008.
Let me buy you a half-a-rack at Buster’s next time you are in Ventura County. You’ll think you’ve died and gone to Kansas City.
Yer on!
Buying in the obviously growing areas where employers are expanding and the cost of living is far lower than California and other extremes, still make sense to buy this year — big time. Those who wait, in my view, will literally pay the price.
You guys are playing on a level I only look up at when my neck feels stong. I will add this observation though: I work with a lot of residential real estate agents, both as coach and as lender, and over the last thirty days they can not stop their phones from ringing.
Whether this is pent up demand from last year or a return to some balance in the market remains to be seen. My own (stikingly myopic) financial analysis gives me some concern about what I see as a potential debacle for many main stream lenders.
The sub-prime “crisis” was mostly a press driven frenzy. But I (as well as the Great and Powerful Oz over at Mortgage Rates Report) have been reporting on Countrywide’s demise since last April. I don’t think they’re the only ones by a long shot. Wall Street does not take kindly to accounting problems and they definitely don’t care for companies that restate their earnings (ask New Century). I am more than a little nervous that both of these problems are going to plague the neg-am lenders in the coming months. Just my 2 cents’ worth.
Well, its August 2008 — and now half a year later, that looks like a terrible call by Zell.
Barry — Not lookin’ like a bulls eye is it?
I’ve thought for quite awhile we’d see signs in the 3rd & 4th quarters of a potential bottom.
Now, in very hard hit places like Phoenix and San Diego, we’re seeing the beginnings of the correction losing steam. First, SD was taken off the ‘declining market’ list. Not a bad sign. Then we started seeing 1-2,000 REO’s monthly in Phoenix sold. About 20-30% of them via multiple offers for more than listed price. Same now happening in SD.
Was Zell on the money? Doesn’t look like it. Are we maybe lookin’ at the correction slowin’ down in preparation for a U-Turn? I think it could be more likely than not.