Sam Zell: "US won't enter recession; sees housing recovery in Spring"

Discussion in 'Wall St. News' started by makloda, Feb 26, 2008.

  1. The US economy will avoid recession as the housing market begins to recover this spring, according to billionaire investor Sam Zell.

    Speaking on "Squawk Box" this morning, Zell attributed much of the current economic troubles to fear-mongering and politicking by Democratic presidential contenders Hillary Rodham Clinton and Barack Obama.

    "Obviously what we have going on is an attempt to create a self-fulfilling prophecy," said Zell, chairman of Equity Investments Group and owner of the Chicago Cubs, Chicago Tribune, Los Angeles Times and other companies. "We have two Democratic candidates who are vying with each other to describe the economic situation worse.

    "The reality is that if you live on Wall Street and you're in the credit markets the world couldn't be worse. If you're a farmer and you're getting $25 for your wheat, you're having a great time. If you're a CEO and you've got a balance sheet that's bullet-proof, you're in a great position. This whole thing is way out of control, way out of hand."

    Zell said that although he doesn't try to pick bottoms in markets he believes housing has hit its nadir and will turn around this spring as inventory clears out.

    More: http://www.cnbc.com/id/23350846/site/14081545
     
  2. Bravo Mr. Zell.
     
  3. <i>"If you're a farmer and you're getting $25 for your wheat, you're having a great time. If you're a CEO and you've got a balance sheet that's bullet-proof, you're in a great position. This whole thing is way out of control, way out of hand."

    Zell said that although he doesn't try to pick bottoms in markets he believes housing has hit its nadir and will turn around this spring as inventory clears out."</i>

    Most farmers sold their wheat long ago... it's in the hands of middlemen, producers or sprouting shoots beneath winter snows for the new crop now. $25 bushel is too late for them.

    On the other hand, most farmers are right now buying their seed, fertilizers, pesticides and fuels for next year.Think Sammy has any idea where corn & soybean seed will be priced? Does he know what the core materials of most fertilizers and pesticides are? Oil and/or natural gas.

    If he was that smart, we wouldn't have to explain those costs of production to him. Likewise, I'm sure he pushes his grocery cart thru the local supermarket and sees falling prices all around himself.

    Two of my close friends own & operate restaurants. Can't recall them complaining about food / ingredient prices going down in dramatic fashion. I almost think they said cost of served meals has nearly doubled. Maybe they were mistaken... Sambo knows more about that than those restaurant owners would.

    Housing inventory is clearing out this spring? That's remarkable. Who's doing all of what will be world-record buying? Must be cash galore out there in the hands of middle and lower-middle class America... heaven knows they won't be financing those homes :cool:
     
  4. empee

    empee

    The median price of an existing, single-family detached home in California during October 2007 was $497,110, a 9.9 percent decrease from the revised $552,020 median for October 2006, C.A.R. reported. The October 2007 median price fell 6.4 percent compared with September's $530,830 median price.

    http://www.svdaily.com/realestateprices.html

    Median Income in California:

    California Estimate Margin of Error
    Total: 64,563 +/-413
    2-person families 60,032 +/-524
    3-person families 64,766 +/-854
    4-person families 74,801 +/-868
    5-person families 64,132 +/-1,356
    6-person families 61,348 +/-1,096
    7-or-more-person families 68,030 +/-2,050

    http://www.census.gov/hhes/www/income/medincsizeandstate.html

    ---

    So how is this going to resolve itself, $500k median price and what $65k median income?

    I know its California, but its CALIFORNIA a big state and huge economy.

    How's are families making $65k going to swallow $500k houses? Will we move to a society of permanent interest-only owners?

    OTOH, how much did it juice the economy taking a "fair-value" of a house of say $150k and taking it to $500k, extracting equity along the way (and of course the usually carnival of new decks, patios, etc etc that come with appreciation).

    Another possibility that is that long-rates go signficantly lower (ie for ppl buying fixed). I know it doesn't make sense especially with FED lowering rates, but I'm just trying to figure out how its possible this doesn't get ugly.
     
  5. Sam wouldn't lie. Why, he was on there to help everybody. Just like the guys who say this isn't really a recession.

    Go anywhere and shop for food, and listen to the lower class. 4$ milk, 2$ egg. $3 bread. On the way home, 3.50 for gas.

    You'll get a Democratic Prez, because the people are feeling poor. And when the bottom 30% of the country sufferes, everybody suffers. Why do you think all politiicians are so anxious to give you $600? It's like a bad parent giving into a kid to keep him from crying.

    Start thinking for yourselves. Sam Zell Sold Equity Partners because he's smart. He did TV because he's smart. He doesn't work for you, and he doesn't care about you.
     
  6. I remember seeing a story about Naples, Fl having 32 teachers renig because they couldn't afford to live there. Common sense says, if the median salary is "x", and the median house is a 50x, it can't stay there. Check these out, look at the dates.

    http://www2.edweek.org/agentk-12/employer-resources/2006/08/09/44homes.h25.html

    http://www.naplesnews.com/news/2006/feb/19/district_looks_alternative_methods_housing/?local_news
    http://www.sptimes.com/2006/04/23/State/Where_will_the_teache.shtml

    Wasn't bad. W/I a year of the top.
     
  7. Maybe Zell does have his finger on the pulse of middle America. Perhaps he was behind me in line at the local feed store this weekend where I bought 100lbs of sweet feed for the critters here. Sam probably heard how some of the local farmers can only keep their operations going by selling ground to windmill operators now erecting those 400' blights on every scenic hilltop here. Equipment and production prices for small farms are now over their heads.

    I didn't notice him in my basement when the local fuel oil company owner stopped by to see my wood/oil furnace in operation. That $5k investment in 2006 has already paid for itself, and then some. My friend <b>who sells fuel oil</b> cannot afford to burn $3,000+ per year himself, and is switching to wood fuel next season. Imagine that.

    It's possible many of Sam's relatives and friends are looking forward to their government welfare checks so they can pay off fuel bills, buy new furnaces or repairs made to their aging vehicles that won't be getting replaced any time soon.

    While Sam drove thru the local suburbs here, he probably noticed for sale signs on front lawns lined up like picket fences. Not many of them had "sold" tags on top.

    Zell has billions of dollars. Therefore he is more in tune with what's going on than any of us. Sounds good.
     
  8. sukhen

    sukhen

    If the current FED Board seems more like a bunch of clowns, why can't they be replaced by more competent people?
     
  9. What I'm wondering is why he sold EOP last year if he thinks real estate will recover? Presumably he didn't sell expecting any substantial upside potential
     
  10. What he said was, that the price he was offered did not jive with any analysis of the future he could comprehend. That 's what he said.

    Obviously, he's talking his book. Real estate is going lower. Write ups are not going to happen. When the market ralllies w/i the context of a bear market, CNBC will chirp.

    It's all what they want you to hear. I'm not the sharpest knife in the drawer, but I learn my lessons well.
     
    #10     Feb 26, 2008