The real estate market is not healthy. The excesses and sheer stupidity of some investing decisions have yet to be worked out. The New York Times will have a prominent story in its Tuesday, January 19th edition, Metro section: click here
Analyzing the housing market is like doing triage on a patient. Here is my take: The patient may not be bleeding as badly as before, but he is still bleeding to death, simply not as quickly as before. Unless the bleeding is arrested and the patient stabilized and able to recover, there is no recovery, only a slow march towards death. This is the same situation facing countless small businesses and homeowners. While there may be "improvement" according to certain economic indicators (take your pick), that improvement is often measured against some ghastly late-2008 / first quarter-2009 numbers. The parachute may have opened on the economy, but the patient is still failing and is going to hit the ground.
By the way, the Times' story detailing the sad conditions at an investor-owned apartment building in The Bronx illustrate the dangers of the moral hazard. A bailout here will not help any of these tenants. It will help the absentee investors, who have virtually no incentive to plow a penny back into the building. The tenants will only be helped when someone comes in (either a government agency or government sanctioned private-public special entity to help manage the building, in the equvalent of a trustee/custodian relationship) and is able to repair, renovate and maintain the building in the proper condition. The proper balance of incentives to the investors, lenders and tenants must be struck.
Eric Dixon is the author of the Crime, Politics and Policy blog and also practices law in New York and New Jersey. Mr. Dixon has substantial experience in serious, high-level negotiations in business and commercial matters. Mr. Dixon also takes a real-world, practical approach to these situations in his practice. Mr. Dixon is available for consultation and is reachable most of the time at 917-696-2442.
