Worse or Worst

You know that total gloom and doom have taken over when people start talking about how this real estate downturn is even worse than the early 1990s debacle, which was billed as an industry depression not to be repeated for generations. But that's the current vibe. Market psychology tips toward capitulation–”it's bad and its just going to get worse,” says a former colleague at a major investment bank.” Says another veteran at a well-known advisor–”This is definitely worse than twenty years ago, because everything is in the tank, not just real estate. It's a worldwide financial melt down.”

The saving grace for some real estate pension fund advisors is “that real estate is a small part” of their clients' problems.” Stock and bond portfolios, private equity investments, and other alternative investment forays have so far fared worse than property investments. In the early nineties, real estate value declines stuck out like a sore thumb for institutional investors, who threatened to swear off the asset class, and some did (until getting back in just as the cycle approached its peak).