Silver Linings?

November 11, 2008

The real estate market continues to reel, as Fed Reserve chief Ben Bernanke in the last week of October said that a 'Government backstop' was necessary to shore up the mortgage securitization market. That news came on top of expectations for continued declines in home prices, with Fitch predicting that home prices will fall 30% from their 2006 peak.

There was some reason for cheer, however, as a few investors have been opportunistic in the sector. Deutsche Bank's asset management arm, for instance, snapped up a "significant" minority stake in Rosen Real Estate Securities and Prax Capital made another housing bet in China. Also, a survey from JE Robert Companies, points to optimism for commercial real estate among institutional investors.

With that said, the mood has been predominately downbeat. As the Wall Street Journal's "Deal Journal" blog pointed out last week, Thomas Barrack, of Colony Capital, reportedly revealed in his October letter to shareholders that the next "tsunami" to hit the financial landscape could be the commercial real estate market. It's not exactly what real estate investors may want to hear heading into December.