Interview: U.S. Jewish leader says "generation opportunity" appears in real estate market

Jack Rosen, chairman of the American Jewish Congress and also an eminently successful real estate developer, has said a "generation opportunity" in the U.S. real estate market has appeared.

Urging the buyers or investors to seize the opportunity, Rosen, who is chief executive of several commercial and residential real estate firms, told Xinhua in an exclusive interview recently, that the U.S. real estate bubble is "burst" and the U.S. economy is recovering. "All signs show that the U.S. real estate market is stabilizing and tends to move upwards in the near future."

GENERATION OPPORTUNITY

Speaking in Rosen Partners' office on Lexington Avenue, Manhattan, Rosen said "the U.S. economy in the last two years has been in a downward spiral and the result to that has been very distressed in real estate pricing both in residential housing and commercial properties," adding "what we see happening now is bottoming out of that cycle. Pricing is beginning to stabilize and in some cases even move up somewhat."

"Our own experience in our projects which are located in New York, Florida and other cities in the United States is that we are beginning to see buyers back to the market and prices begin to increase slightly," he said.

"It is an opportunity of a lifetime. It is really a generation opportunity for those who are able to take the opportunity to buy real estate today in America," he said, with a broad smile. "We've never seen price this low in decades."

According to Rosen, he saw in his own projects approximately a drop in pricing of 30 percent in New York market and a drop of 50 percent in Florida and other markets. In the meantime, the replacement cost is close to the pricing of the housing. By replacement cost, he said, it refers to the amount that an entity would have to pay to replace an asset at the present time.

"There is a cost of building a project. That is cement, concrete, bricks, lumber and other materials that are not going down as pricing ( of real estate) drops. But when the price of oil is going up, the price of construction is going up, so as commodity pricing is going up and the replacement cost will continue to go up," he further explained.

He said that pricing of real estate in the United States is beginning "to be the same level as the replacement cost," and "if replacement cost is somewhere near what we call the price of purchase, you can expect that it can't go still lower. Otherwise, no one would be able to build anything."

ALL FORCES COMING TOGETHER

Speaking of other factors to support his "lifetime opportunity" theory, Rosen said that "we've seen people take their money and invest in real estate here and there have been many funds that have been created in Wall Street to purchase real estate."

"The U.S. government programs have been very supportive for those who want to purchase real estate and there are many programs where they assist individuals in financing the purchase of their real estate," he said. " We have programs through the help of Fannie Mae and Freddie Mac, which provide a number of programs assisting people to purchase."

Freddie Mac is a government sponsored enterprise of the U.S. federal government. The company was created in 1970 to expand the secondary market for mortgages in the United States. And Fannie Mae's purpose is to purchase and securitize mortgages in order to ensure that funds are consistently available to the institutions that lend money to home buyers.

"We see all the forces coming together that will result in increasing values," Rosen said. "I think they increase very rapidly because our current values are near replacement costs, so things have to be going up because of the government support, because of a great amount of wealth that is ready and looking for opportunity to buy. We are now finding buyers coming and trying to buy multiple units, large package of units and resell as you see in investors, thinking the market is going up dramatically."

Speaking of the banking institutions, Rosen said they are now " healthy again. They are the primary driver in real estate investment, so suddenly money is becoming available for investment. This is the time for people who are for investment reasons or because they want to have a home for themselves or for their children."

Wearing a smiling on his face, Rosen said that "the bubble is burst and there is no more bubble. We are waiting to build another bubble, hopefully in another 10 or 20 years."

"We are getting recovery. You will see in the next few months job creations," he said. "While new jobs are created, consumers will spend more and factories will manufacture more. I think we are seeing the bottom of this cycle."

Rosen told Xinhua that he is finding the traffic is increasing in his own project, and his company is selling more than it was six months ago. "This downward cycle has been around three years, which has been a long downward cycle. "I think it's high time for a recovery."

Rosen said although the U.S. economy had been deteriorating for the last two or three years, "there is still a great deal of wealth in America."

"This is not a downward cycle that everybody has run out of money, but it is a downward cycle that many people have lost their jobs and some have lost their money.

As a successful real estate developer, Rosen highly recommended that buyers should consider location first while ready to purchase housing or commercial properties in America.

"I would highly recommend buying in Manhattan because it is a city that has a lot of foreigners who either visit or have a home, " he said. "It will be a magnet for foreigners to live here for a long time to come. There will always be demand for housing here. "

He said there is a limited amount of land in Manhattan. " Central cities like New York, Los Angeles and some Florida cities are some best places to live."

He also suggested diversifying the portfolio and finding a developer with good reputation while ready to purchase.

Active in international government and political affairs, Rosen has participated in numerous commissions and councils for former U. S. presidents George W. Bush and Bill Clinton. He is currently a member of the Council on Foreign Relations and the U.S.-Israel Bi- National Commission on Housing and Community Development.

Around his elegant table, in his seven-story home off Fifth Avenue, Rosen and his family have hosted presidents, senators, prime ministers, and other major players in world politics, including the Clintons and Ariel Sharon, former Israeli Prime Minister. But for Rosen and his gorgeous wife, Phyllis, it's not simply about breaking bread with notables, it's about breaking barriers and opening minds.

Source:Xinhua