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Tim Zietara is managing director, structured finance, with CIT Commercial Real Estate in New York City.

Few of the folks who took our Feedback Poll last week are biting their nails over the mortgage mess. In fact some 62% believe–understandably–that it can only help the multifamily market, leaving only 38% expecting a more broad-based crisis to roll over the entire housing sector. While commentator Zietara plants himself in the majority, he can see the other side’s hesitation. He explains, below.

“As a broad statement, I believe it will help the multifamily market. I would have voted on the other side if I had answered that question in a vacuum for the short term. A number of homes and condominiums have been dumped on the market in a very short period of time, so supply has increased. I’ve seen numbers thrown around that say there could be upward of a million unsold condominiums and homes on the market today.

“I don’t think that this, in itself, is such a bad thing, because it creates an equal amount of demand for multifamily housing. The people who have been moving out of those homes because of sub-prime issues will be relocating into rental properties, and many of them will be relegated to the rental market for the very long term.

“It helps that rental-cost levels are still much cheaper than owning. And in some of the markets that have had a huge run-up in housing costs–New York City or L.A., for instance–the cost advantage of renting is almost straight across the board.

“The economy is also playing a hand because issues such as gas prices make it harder on a macro basis for people to save money. And if you can’t go into housing based on borrowing 100%–because the sup-prime market has gone away–would-be homeowners will be relegated to rental housing longer term as well. And on top of that, if there’s a recession, it will only worsen the homeownership market.

“So a well-situated multifamily real estate owner is in a very good position right now. There’s room to grow rents and new demand from former homeowners who are still good rental risks. So, overall, in the long term the rental market will benefit.”

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