Listening to CNBC, why do I continue to listen and watch this nonsense? They are forever trying to find the indicator that the market is turning around. As the market fell and fell they were all good news on a turn around and then when the inevitable happened they finally said OK we might have a problem as the market is at all time lows and dumping 700 points a day! Only to go back to their rosy outlook the very next day on some news that housing sales may be up 1%. First remember that governments tend to cook the books and change indices in growth and employment figures that don’t paint the picture they want to paint so you can’t trust the numbers. Which ones? Who knows? The stock market numbers for the life of me make no sense so why is anyone speculating on growth based on those numbers?
I used to write a newsletter. You don’t see much come from me anymore on commercial real estate, because I got tired of reporting bad news. One year ago I predicted, without having to know too much, that the commercial markets would go by the way of the residential markets as many of those loans were also securitized. Commercial always lags residential by around 2 years so it was just a matter of time and we are seeing commercial numbers get progressively worse, like the 2008 CMBS delinquency figures which continue to rise according to Fitch Ratings and Fitch expects more large delinquencies in 2009 (http://nreionline.com/finance/news/fitch_expects_loan_delinquencies_0121/). I keep hearing reports that it can’t be getting worse because someone, somewhere just completed a mega commercial deal. I remember buying stock in a phone company, no names, but it rhymes with MCI, and I road that falling knife all the way to the floor. Buying ever more stock at the new reduced rates because how can MCI go down any more for gosh sakes!? Also, as I have said many times before, all real estate is based on location not global figures so there could be some very lucrative deals being struck as the rest of the world continues to fall and falter.
International Real Estate Investor’s Institutional Outlook reported in the March 9th issue (http://nreionline.com/finance/news/stunned_losses_institution_0309/ ) that institutional investors were seeing their investment portfolios drop by 31% in 2008. Where will the numbers go in 2009 with rising un-employment and inflation figures? Well the article says that the investing news is actually good as these investors will move to real estate. What? The poll they took stated that more investors would leave the equity markets to place their money on real estate. On what news? On what numbers is there a basis for this general move to real estate?
I will make another prediction…. The bottom is not here yet! Unless you know your market or have money to sit on you should wait to buy as the market goes up not as it is falling. This is simply investment 101. By the way, when the market does start to make a steady rise sometime between 2010 and 2012 it will move very slowly and steadily up globally so appreciation will not be at the staggering rates of the recent past.
I know picking between 2010 and 2012 makes me right no matter what, so just to make you feel better or not I believe steady growth may not occur till 2012.
JW Najarian
www.jwnajarian.com
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