Valuation committee meeting notes.(NEWS FROM NCREIF)(Conference notes)

Te National Council of Real Estate Investment Fiduciaries (NCREIF) held its 2008 Winter Conference in Phoenix, Arizona, March 4-6, 2008. The general sessions, which were attended by members of all NCREIF committees, included interesting presentations on the national real estate market. As is typically the case, a number of speakers active in the local market focused their comments on the host city for the conference.

General Sessions

The keynote speaker at the general session, Elliott Pollack, whose firm provides economic and real estate consulting services in Arizona, offered a memorable quote to describe one of the themes of the conference: "2008 will be remembered as a year you would want to forget" His comments were directed mostly at the Phoenix housing market. The local market experienced a decline in occupied multifamily units in the third and fourth quarters of 2007, a significant anomaly for the historically robust Phoenix market. In Pollack's opinion, the period required for a market recovery will be three to five years, suggesting that a relatively quick fix is not foreseeable.

Real estate consultant John Burns presented background on the subprime crisis and its effect on residential real estate nationally. In his view, the bursting of the housing bubble, which occurred with the subprime crisis in the late summer of 2007, should have occurred in 2002. However, the Federal Reserve's low interest rate policy to fight inflation stimulated development and price increases that were capital driven, overpowering the fundamentals of supply and demand. He predicted that the shadow of the subprime crisis will continue to haunt the residential real estate market through 2009 as a significant number of low interest rate ARMs will continue to experience rate increases as they hit their adjustment periods.

John Burns also noted that national single-family transaction volume will hit a low of 4 million units in 2008, compared to a peak of approximately 8 million units in 2005. He said another sign of weak demand and oversupply is the astounding total of 1.7 million single-family residences that presently lie vacant in the United States.