Another Real Estate Crash Is Coming: Legendary Market Timer Unloads His Positions: “They’ve Sold Deferred Reality For So Long…”
If you haven’t heard yet, median home prices in the United States are on a tear having reached all-time highs in April. To boot, rental prices have gone insane, showing a year-over-year inflationary increase of 8%. On top of that, stock markets are rocketing back to their own all time highs based on the premise that the U.S. economy is seeing healthy growth. By all official accounts, it appears that we’re back on track.
But appearances can be deceiving and highly acclaimed investment guru Sam Zell isn’t buying the hype. In fact, he’s taking this opportunity to sell… in a very big way.
And he has been selling. Back in 2007, he once again proved his sense of market timing. As the commercial property bubble was already teetering, he sold Equity Office Properties Trust to Blackstone for $23 billion, not including $16 billion in debt.Then prices crashed, and commercial property defaults hit the banks. As the dust was settling at the end of the Great Recession, he went on a shopping spree.
Now he’s selling again, unloading multifamily properties at peak prices on a massive scale just when a multi-year construction boom is flooding the marketwith new supply.
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So when Sam Zell speaks, our ears perk up.
In a recent interview with CNBC Zell noted that zero interest rate policies are removing the risk of borrowing, making it easy for big banks and finance companies to keep pushing supply onto the market.
Easy credit. What could possibly go wrong?
A lot, according to Zell:
“Overall we’ve come off this extraordinary period of liquidity and this extraordinary period of low interest rates… I think we’re unlikely to see a repeat of that going forward, and I think we’re going to see more supply in what had been pretty tight markets.”
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