A bottom in housing? That's a big 'No' at this confab

I'm at the annual Milken Institute global conference today in Beverly Hills, where 3,000 people from around the planet get together to hear 130 panel discussions on the big issues of the day.

Naturally, you couldn't have a meeting like this without the U.S. housing crisis being at the top of the list of hot topics. So what follows are some of the highlights from a packed morning session entitled "Real Estate: Where Is the Bottom?" (The short answer: not here.)

Brian Fabbri, chief economist for North America at global investment bank BNP Paribas: He sees no chance that home prices will bottom anytime soon, given the glut of supply on the market. Despite that glut, "Builders are still building more homes for sale than people are buying today." As for hopes that mortgage delinquencies might peak soon, "We're going through a recession. In every recession we lose 1.5 to 2 million jobs. We'll lose most of those jobs through the second half of this year."  So the math doesn't add up at all for a respite from mortgage-loan defaults, he figures.

Sam Zell, real estate investment legend and now the head of Tribune Co., the L.A. Times' parent: "What this country needs is a cleansing" in the residential market. "We need to clear out all of those people who should never have been in houses in the first place and who for sure shouldn't be getting sympathy." He blamed another Sam -- Uncle in Washington -- for encouraging homeownership at any cost in recent years. The rise in the U.S. homeownership rate from 63% to 69% during the boom was totally unjustified, Zell said, other than by "the political impetus of, 'Let's put more people into homes they can't afford. ' "

Bobby Turner, managing partner of investment firm Canyon Capital Advisors: He and Canyon are big fans of urban real estate in cities with growing immigrant populations (Canyon has partnered up with Earvin "Magic" Johnson in urban development). But the real estate market in general, he suggested, has too many buyers hovering, thinking it's time to grab bargains. "I think you've got this universe of investors that really don't understand the nuances of real estate." Although Canyon has capital to invest, Turner said, he's content "to sit on the sidelines awhile and let people make mistakes."

Posted April 28, 2008

Comments

[Chris Pepper]

Tom-

Great to see you're blogging. I was always on the look out for your column on the weekends. More of you is better. Would be great to get some of your opinions on what you're seeing in addition to what you're seeing.

[Robert]

Bush and Cheney 'We proved under Reagan, Deficits Don't Matter"... ordered Comptroller of Currency to Block State Attorney Generals from Regulating Mortgage Loans, causing Housing meltdown. Cheney Secret "Energy Policy" of Iraq Oil takeover costing $ 750 Billion So Far....

ARE ALL TURNING USA INTO 3RD WORLD - 70 percent of Americans will Rent Not Own Homes and Middle Class will Disappear!
Hoover= "Great Depression 1929" -- Bush="Great Depression 2008"

[MoralHazard]

It is a shame that Bobby Turner gives off the impression that housing is an "investment". Most people want a "home". Unfortunately, a lot of people aren't just sitting on the sidelines waiting for a "good deal" they are waiting for house prices to come back to realistic levels based on REALITY (ie - income) and also, another factor to this "sideline sitting" is that the money is just not available in the mass and unregulated quantities it once was.

Not to mention, the banks are holding on tight to the prices these homes were once selling for in the boom because they don't want to have to show these huge losses either. The bottom line is someone will have to pay for all of this greed (taxpayers??? reallY???). The word "bailout" to me means "welfare for the rich".