Nation Turns to Real Estate
One assessment of Wall Street’s unprecedented fallout is that the real “buys” remain in real estate.
In the wound-licking aftermath of last week’s events, the housing and construction industries--leading factors in the nation’s economy--loom even greater in the recovery period to follow.
Interest rates, the key to all housing finance, are expected to drop just as quickly as they escalated and that always sparks new buying. The stunned world of capital will need all the help it can get.
Jim Stokas, a retail salesman for Coldwell Banker, was among the first to realize how quickly investors can turn their attention to real estate.
“The number of phone calls I received Monday afternoon was tenfold compared to what I usually get,” he said. His callers were reacting quickly to the day’s events and were interested in buying or leasing properties in the San Gabriel and Pomona valleys and in south Los Angeles, areas where Stokas is active.
Joel Singer, chief economist and vice president of planning and research for the California Assn. of Realtors, surmised that real estate will fare far better than many other sectors of the economy.
“We think people, having looked at what happened, will look at the advantages of tangible investments and hard assets, which real estate is. So real estate will be more favored than it has been in the recent past.”
“The economy will be hurt but real estate is a little more resistant to this type of debacle.”
Singer predicted that there will be a short period of indecision by buyers as they mull over the economic uncertainties.
“Any time there is a major event, people sit on the fence a bit. In the longer term, if there is any direct effect, it will be on the high-end residential market and to some degree, the investment end, and any loss in a portfolio has a dampening effect but . . . real estate will be less directly affected than many other sectors of the economy.”
He defined the high-end housing market as upward from $300,000.
Some economists who were among the walking wounded believe and expect that the nation is headed for single-digit interest rates, even before the year is out. Just before last Monday’s epic drop of stock prices, the conventional 30-year mortgage rate averaged 11.55%, the highest level since November of 1985.
But such predictions will require a period of stability and recovery after Chaotic Monday.
It will be particularly heartening locally to turn the page on October. An earthquake, a heat wave and a downtown power outage are enough for any short span of history.
