Professor Nouriel Roubini a professor of economics at NY University and a writer for Forbes.com recent led wrote " The US will experience the most severe recession since WWII, much worse, longer and deeper than even the 1974-1975 and 1980-1982 recessions "
The world will experience a severe recession.
No-one likes such dire predictions but we all need to be prepared for the
worse.
Yet, this is both bad and news to some degree. For the free-for-all real estate speculators of the past 20 to 30 years is coming to an end. These speculators purchased commercial grade and prime real estate pushing prices and prices ever higher.
Many of these speculators will now face some rather severe times especially if they planned to cash-out in the near, to short term, future. They and their don't-give-a damn-bankers and financial institutions face some rather stiff headwinds.
Some small and large real estate empires are simply going to vanish.
We can now see cracks in the facade of the Mall and Shoppings Center golden eggs
as the retail sector suffers a major downturn(which is anticipated to last until mid 2010). Linen's Things,Sharper Image and Circuit City, and many smaller retail firms, have already gone into bankruptcy. Anticipate more retail failures, is the news, in the beginning of 2009. It's going to be a miserable Christmas for most retailers.
Office building in major cities are now seeing vacancies rapidly rise as "financial related firms," go-out-of-business.
Many retail and office buildings were purchase on speculation. This current and anticipate economic climate is a long over-due adjustment.
So the stagnation/ recession/deflation prediction may be very good news for those sane and conservative investors waiting-in-the wings.
Perhaps we will finally see prices returning close to "value," especially as determined by the tried and true income approach to valuation method.
The day of the real estate investment BUBBLE appears now to be ending.
Bill McInerney
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