In the economic market update panel titled: “Heaven in 2011 or Are We Still Knocking at the Gates?” moderated by Scott Farb, managing principal at Reznick Group, panelists agreed that a year makes an incredible difference. Panelists indicated improving transaction volume, capital flows, and improving fundamentals as examples, but agreed the industy is "still up against some challenges.”

Farb explained that the residential markets are still depressed, there is an industry-wide equity gap, and while property fundamentals have improved this year, vacancies remain. “A full recovery might still be a long time away.”

Panelist Christopher Thornberg, principal of Beacon Economics, explained that if you look at the economy today, there was big bounce in the fourth quarter of 2010 leading to "heat." He said, “but the growth is proof that given enough steroids, even I can hit a ball like Barry Bonds.” He added that “we are an economy that has been pumped full of juice,” but said that it won’t last forever. “Good for now…but in two years, watch out.”

Randall Zisler, president and CEO of Zisler Capital Associates, agreed calling the market treacherous. “There are those people I believe suffer from risk illusion,” he says. “What we are dealing with here, fundamentally, is a 'disequilibrium' economy,” which he says means that the market is imbalanced.

Zisler pointed out that it is even more difficult to generalize about the market today. “I think we have been riding on a bubble of liquidity,” he says. “I forecast that what happens if you have these large bubbles, you get a residence of mini bubbles…they don’t get eliminated, they just move around.”

From a transactional point of view, certainly there is more optimism, said Martin Pupil, regional managing director of Colliers International. “The challenge is that not every market is the same so it is hard to draw general conclusions.” In terms of the long term play, core assets are good, say Pupil. “There is renewed optimism in activity, which is great.”

It is safe to say that there is lots of capital chasing too few transactions, said moderator Farb. When asking panelists if they think the banks and special servicers will start to unload these assets, most said that no dumping of assets will occur. “Banks don’t want to foreclose, they want to renegotiate and work it out,” said Thornberg. “If they truly have a troubled product and they can’t do anything with it, they will sell the note. I expect only the worst of the worst stuff to be foreclosed on and put on the market.”

Thornberg continues that if there was going to be a wave of sales, it would have already happened. “It is much easier for a bank to sit down, go through the numbers and renegotiate the loan…it is much cheaper that way.”