Monday, January 11, 2010

The slo-mo train wreck and mainstream media

A lot of people have been writing about Time's characterization of the commercial real estate market as a "slow motion train wreck."  And I agree with those who think it may well be an apt analogy.

There is still going to be hurt going on as loans mature, lenders do not lend, and equity requirements go through the roof. And I wonder aloud if we'll still need some kind of RTC situation to eventually handle it, although the slow-mo nature of it all may obviate that need.  I do know this: when some smart folks were talking about how awful the market was, the mainstream media was gaga over how great it was.  So...can you say vice versa?  I'm just saying....

6 comments:

Jeff said...

How bittersweet is the irony that the perpetually late bus MSM talks about slow train wrecks?

David said...

Isn't that the truth!

Doug Lytle said...

Hadn't read the Time's article yet, thanks for the link David. After having taken some time to read it over, I'm wondering who I should listen to now! I just watched this video on CNBC with Barry Gosin: http://www.cnbc.com/id/34769473 and he's calling a bottom now.

From the Time's article: "Finally, the vulture investors who usually swoop in and refire markets after a bust are still hanging back." and "The smart money, and there is plenty on the sidelines, is waiting for the bottom to materialize"

The vultures really are sitting back and waiting - they've been waiting for this 'point of captiluation' that has become the bain of my brokerage existence! They've got the money to do deals - I know they do because they're calling me regularly looking for bargains - they just don't want to be the first guy on the dance floor for fear of looking stupid. I say waiting around for the market to turn is stupid. By the time the indicators are in place that the market has turned, the really good deals will be gone!

What do you think?

David said...

Doug:

Not that I am an expert at all, but I think we are at or near a bottom.

BUT, with lenders either not lending or doing so at unpalatable rates or LTVs, the vultures cannot make the IRRs they and their investors want. Regardless of price it is hard to make significant return on a all cash deal or a 50% levered deal.

So, imho you either have to shoot for singles or doubles, or sit things out until market conditions change to hit the home runs.

faith said...

The smart money, and there is plenty on the sidelines, is waiting for the bottom to materialize.Regardless of price it is hard to make significant return on a all cash deal or a 50% levered deal.



Best Attorney

faith said...

the vultures cannot make the IRRs they and their investors want. Regardless of price it is hard to make significant return on a all cash deal or a 50% levered deal.So, imho you either have to shoot for singles or doubles, or sit things out until market conditions change to hit the home runs.

Best Attorney

 
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