"This is temporary," Shlomi Ronen of Dekel Capital tells GlobeSt.com about the current economic disruption related to the coronavirus pandemic. The timeline—which many experts believe will be brief—sets this economic event apart from others, which have a more undefined timeline and longer period of negative growth, according to Ronen.
"If you look to places like Singapore or China, which were ahead of the curve in terms of dealing with the virus," Ronen, managing principal at Dekel Capital, tells GlobeSt.com. "That is the big difference between this and the financial crisis. No one is asking how long the recovery is going to take. We know that as long as the public cooperates and doesn't allow the virus to get out of control, this is a one-month event of self-isolating."
The response, on the other hand, will be from the same playbook as prior recessions, including quantitative easing and financial relief we have seen from the Federal Reserve and Congress in the last few days. "I don't think that we are going to see anything new," says Ronen. "Historically, the Fed has played with interest rates, but quantitative easing was relatively new and effective. The markets have also evolved over the years. The financial instruments and the way that we are using securitization are new. They are using the tools that they have at their disposal to spur economic activity."
While the tools will be similar, every recovery is different. "The recovery will be different, and it needs to be different to address this specific situation and certain need," says Ronen. "They are doing some of the same things that they have done in the past. The Fed is using quantitative easing, buying bonds—both mortgages and treasuries—to help that segment of the market, and they lowered rates. We are also seeing intervention from Congress. That is all the same playbook that they used before. There will be some of the same, but it will be applied to different industries."
Ronen doesn't anticipate any long-term impact from the event, and expects real estate investors to take a momentary pause. "Last week, someone asked me if in a year from now we would be talking about the coronavirus," says Ronen. "My answer then was no, and it is still no. If you are buying real estate, this isn't going to change how you are buying over the next 10 years. We will get back to some sort of normal pretty quickly."
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.