Property vultures are circling to pick the bones clean of deals as the US property clock has wound prices back to the same levels as they were in 2003, according to financial researchers Standard and Poor’s.
House prices fell 18% in April in S&P’s 10 and 20 city indices.
Commercial property has crashed alongside home prices registering a 20% decline, with market expectations of another good way to go – perhaps another 20%.
“Now that the meltdown has happened, the new emerging market is the United States,” Tom Shapiro, president of real estate investment firm GoldenTree InSite Partners, said at the Reuters Global Real Estate Summit in New York.
“I think there’s going to be the best opportunity to make money in the last 20 years in real estate in the US.”
GoldenTree InSite pulled the plug on US real estate investment in 2006 and focused attention and cash on Brazil instead, with investment in residential and office properties.
The company has a war chest of about a $1 billion to sink in to property, and is ready to return to the US market and take advantage of the right projects that need or will need money when they come up short.
“We are just at the point now where we are seeing some very interesting entry points on certain transactions,” he said.
New York-based GoldenTree InSite invests institutional funds.
Shapiro said his firm likes big cities, such as Los Angeles and New York where struggling commercial real estate markets tend to rebound strong.
“San Francisco right now is a pretty interesting place to think about because San Francisco is a very diversified economy,” he said.
Meanwhile, residential property prices fell – but the rate of decline is beginning to show signs of holding steady fuelling hopes that the market will soon hit rock bottom.
“While one month’s data cannot determine if a turnaround has begun; it seems that some stabilization may be appearing in some of the regions,” said David Blitzer, chairman of the committee in charge of S&P’s index. “We are entering the seasonally strong period in the housing market, so it will take some time to determine if a recovery is really here.”
Phoenix posted the largest annual decline of 35.3%, while Las Vegas slipped 32.2% from last year and San Francisco fell 28%. Denver, Dallas and Boston posted the best performance in terms of annual declines, down 4.9%, 5% and 7.7%, respectively. On a month-on-month basis, Dallas saw 1.7% gain from March while Las Vegas lost 3.5%.
Photo credits: Jeff Turner via Flickr