Experts: Real Estate Market Still Insulated From Major Downturn

NEW YORK CITY-There’s been a definite downgrade in optimism over the state of the economy. The Nasdaq took another tumble Wednesday–dropping more than 200 points after a 300-point rally, with the Dow and S&P in freefall along with it. Uncertainty as to who will emerge from the presidential catfight has further undermined confidence. The cumulative result has been an undertone of doom and gloom lacing the conversations that took place during this past week’s heavy schedule of holiday networking events.

But most experts are telling GlobeSt.com that ledge-jumping might be premature. While just a few weeks ago, most industry-watchers agreed that a correction would be more a slowing of growth than a downturn, they’re saying now that the economy is in for some real bumpy weather. Nevertheless, the real estate industry should be relatively insulated from a severe shock.The fiscal stumble is “going to be hard and ugly,” one unnamed market observer tells GlobeSt.com. He says it’s never a good sign when “the stock market drives the economy rather than the economy driving the stock market. There’s a large amount of capital spending funded by equity offerings and high-yield bonds rather than by revenues.”

But David G. Shulman, managing director of Lehman Brothers’ equity research operations, counters that the industry should be protected from a downturn. “We’ll be fine,” he says. “In 1990, real estate was one of the main causes of the recession. If we have a 2001 recession, it’s going to come from tech and telecom, and real estate will be only a sideshow to the main event.”