Panelist Robert Toll, chairman and CEO of Toll Brothers Inc. said New York and Texas remain among the few strong residential markets, for now. "New York has been pushing prices. Housing has been phenomenal," Toll said. He pointed to $1,500 per sf in Manhattan and even $1,000 per sf prices in Brooklyn and Hoboken, NJ.
But not all is peachy. The subprime fallout has begun and will continue to hammer away at those who had the shakiest credit to begin with. The rich aren't immune either. "We live at the top of the food chain," said Toll, whose homes average around $790,000. "But there's still a chain. So, even though we're at the high-end, there's a trickle-up effect." He said the $700,000 homebuyer is selling out of a $400,000 home, but "who's going to be buying that now?"
As for the fallout, Toll said we won't know for awhile the extent of the damage. "It takes [around] 24 months for banks to start taking back property. We're at 18 months right now."
Larry Mizel, chairman and CEO of MDC Holdings Inc., said this particular housing cycle is different than past ones. "Historically, housing has led out of a slowdown. The difference is, we're not experiencing a slowdown." Toll agreed: "It's a unique time for a downturn. We have low unemployment, the economy's ok, the stock market's good, but housing is really down. So what happens if the economy goes down? Housing could be in a cataclysmic situation."
Steven Green, who is the former U.S. Ambassador to the Republic of Singapore and currently managing director for Greenstreet Partners, sees some interesting trends taking place. "Through the advent of public real estate, there's this craze in Europe and Asia called 'REITs' while in the US, you're seeing a move to privatization," Green said.
According to Green, the globalization of real estate has had foreign players looking in non-traditional areas. "You're seeing many foreign investors who can't find an opportunity in, say, New York, so they're looking for Phoenix, and places like it."
The conference, which concludes its three-day run at the Beverly Hilton Hotel today, has included 470 speakers. Event officials estimate the conference will play host to more than 3,000 attendees, with speakers as diverse as former Democratic presidential candidate John Kerry and California Gov. Arnold Schwarzenegger to film and sports celebrities like Michael J. Fox and Andre Agassi.
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