NEWPORT BEACH, CA-“It is absolutely clear now that the economy is moving forward at a good pace,” said Christopher Thornberg, economist and founding principal of Beacon Economics at Voit Real Estate Services’ forecast presentation on Tuesday. However, although the US is in recovery mode—with fourth quarter growth hitting 3% and maybe more—according to Thornberg, “we have not truly put our problems behind us.”
Approximately 200 were in attendance at the Pacific Club in Newport Beach to hear the forecast presentation from guest speakers’ Thornberg and Scott Bottles, executive vice president of real estate at the banking group at Wells Fargo. Bob Voit, founder of the locally based company began the event by pointing out that his forecast is optimistic. “The world is turning around again,” he said.
Last year at the Voit forecast event, Thornberg’s big message was that we weren’t out of the woods yet. His message this year is that the financial markets and commercial real estate are heating up, and the current growth rates are expected to continue. However, he said, credit and spending problems still exist.
“The problems are being mashed by ongoing government policy,” he said, a point he first mentioned about a year ago at an IREM forecast breakfast. “Continuation of these policies will be a good couple of years ahead, but creates uncertainty regarding 2013 and beyond.”
So although Thornberg encouraged the audience to enjoy the growth for the next two years, he reminded attendees that at some point in time, Washington, DC will have to do something about the out of control deficit. “I need to temper your enthusiasm with a realistic sense of what might be coming down the pipe in the next few years… We have avoided some of the tough choices we have to make.”
American’s are still spending too much and are doing so on the basis of tax cuts, Thornberg explained. “This cannot go on. By 2013, something is going to happen,” he added. “I just don’t know how long we can play this game. At some point in time, we are going to have to deal with this issue, which means higher taxes, and that will lead to an economic slowdown….keep that little voice of caution in the back of your mind and you will be fine.”
Next up was Wells Fargo’s Bottles, who pointed out that in 2009, he spent most of his time on workouts. In 2010, he said, he spent most of his time on transactions.
“Like Voit, the end of 2010 was good for us,” Bottles said. “So, what has changed? In 2010, you started to have a fair number of maturity defaults.”
Of the transactions that Bottles has seen, and is approving, most of them have involved a short sale, the sale of a foreclosed property to another borrower, and the sale of the note, he explained. “I am seeing more note transactions as a lender today than I have for some time.”
His prediction for 2011 is that there will be more note sales and foreclosures going forward. “It is a slow trickle, not the tsunami that was all expected,” he said.
On the lending side, Bottles said, “if you have a stabilized asset and you are going to the market for a loan, there is plenty of money out there.” On the other hand, he pointed out, “If you are looking for value-add transactions and you are looking for non-recourse financing, there isn’t as much out there. That market is very thin at the moment.”
| Highlights from the Event |
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Approximately 200 attendees showed up for the Voit Real Estate Services forecast.
A networking Bob Voit, founder of Voit Real Estate Services, remains optimistic about 2011.
Economist Christopher Thornberg, founding principal of Beacon Economics and guest speaker.
Bixby Land Co. president and CEO Bill Halford, networking prior to the presentations.
Allen Matkins partner Drew Emmel, networking among others at the Voit forecast event.Continue Reading for Free
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
