Why Real Estate Is Strong Even in a Weak Economy
- Topics:
- Market Studies
- Source:
- Knowledge@Wharton
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Overview: When the U.S. economy went through a recession during the late 1980s and early 1990s, commercial real estate hit the pits. An explosion of construction during the property boom of the 1980s gave way to high vacancy rates, pitifully low rents and poor demand for office and industrial space. Back then, the downturn was so severe that it took years for real estate to return to normal. Real estate has been "very strong throughout this downturn," which is "probably the only thing keeping us from a recession. A factor that could drive investors towards REITs and other yield-producing securities relates to the "earnings shenanigans" going on with some tech stocks. Different factors are responsible and explains that the free, unconstrained sources of capital investment, which were present during the 1980s, were not present during the recent past. While savings & loans and international investors made large investments in construction during the 1980s, the so-called dumb money during the 1990s went to dot-coms and high-tech companies. The article, further, talks that the stock market is loaded with irrationality.
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Format: HTML | Date: May 2001 | Pages: 1
