Outlook for the ‘90s : ...
The nation’s real estate markets in the 1980s were a mix of euphoria, gloom, frustration and surprise, and the 1990s promise to be more sober and restrictive as the excesses of the 1980s are cleaned up.
The 1980s brought a real estate depression to Texas and speculative frenzy to parts of California, where housing prices attained new levels of unaffordability. Today, less than one family in five in California can afford a median-priced single-family house.
Bust followed boom in Arizona, and hard times gave way to unprecedented prosperity in Nevada. Las Vegas is now choking on construction crews, but Phoenix is wallowing in a real estate depression.
One real estate investor who stood out this past decade is Donald L. Bren, a well-bred developer with movie-star good looks who acquired Irvine Co., Orange County’s largest private landowner. Another is Genshiro Kawamoto, the nouveau riche billionaire from Tokyo who cruised the streets of Honolulu in a limousine while snapping up homes by the dozens.
The 1980s also witnessed the emergence of Japanese investors into the commercial market on the U.S. mainland. Japanese companies snapped “trophy” office buildings, hotels and resorts all over Los Angeles and New York.
As the 1990s begin, the U.S. government finds itself as the nation’s biggest landlord, having assumed control of billions of dollars of foreclosed real estate when hundreds of savings and loans failed in the 1980s. The cleanup and sale of these properties is beginning now and should extend well into the mid-1990s--and perhaps beyond.
Other trends to watch for:
- The Southern California housing market, sizzling for much of the 1980s, cooled off fast in the second half of 1989. Pessimists now believe that a slowing economy, along with ever increasing congestion, means bad news ahead for the area.
- What was bad in the 1980s will be good in the 1990s, said San Francisco real estate investor Edward Abbott: “Texas is coming back.”
- Bowing to mounting feelings of protectionism, U.S. lawmakers will slap sharp restrictions on foreign ownership of U.S. real estate within five years, said widely-known management consultant Peter F. Drucker.
