In an interview with Bloomberg News‘ Betty Liu, investor Sam Zell says the residential market in 2014 will be benign. “The demand for single-family houses is, in my judgment, muted.” Asked what happened to all the demand for the generation Xers who are supposed to be moving out of their parents’ basements and buying homes, he says they do not want to live where their parents used to live, “they want to live in the city. They want to be in a 24/7 place,” he adds, not out where all the ticky-tacky houses are. “Part of the demand issue is the shift to more urbanization in the United States,” says Zell. “Fifteen years ago someone would graduate with an MBA, and the first thing they wanted to do was buy a house. Now, they defer marriage, they defer buying a house, they defer everything to maximizing their lifestyle. Over the last 20 years, we have taken Equity Residential from basically a suburban garden apartment owner” to a secure high rise in the city.
When asked about a comment he made earlier that there is a saturation of REITs (real estate investment trusts)—203 at last count, he says, “I think there are only about 30 REITs with size, scale, and market impact” that may essentially swallow up the $700-800 million REITs that are irrelevant because they have no scale and no liquidity. “The goal of REITs is to provide capital for the real estate market. If you can’t provide liquidity then there’s no capital,” says the billionaire investor. (Equity Residential has $34 billion, Equity LifeStyle five or six billion.) When asked why there are so many REITS he says one reason is because real estate is a very attractive asset class.
He says the one percent of the population who own so much of the wealth in this country are being pummeled. Noting that the one percent work harder, he says people should emulate the wealthy, not envy them.
As MHProNews.com knows, Zell’s Equity LifeStyle Properties, Inc. is the largest operator of manufactured housing and recreational vehicle communities in North America with 380 properties.
(Photo credit: Wall Street Journal–Sam Zell)