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* U.S. housing sector to stabilize during the summer
* U.S. retail sector to recover, but spending lower
By Ilaina Jonas
LAS VEGAS, May 18 (Reuters) - The U.S. housing market
that has badly deteriorated in the past three years will
stabilize this summer and the United States will be the
first economy to rebound, Real Estate mogul Sam Zell
said on Monday.
"Housing market stability will appear sometime this
summer," Zell said, speaking before more than 2,000
people attending a luncheon at the International Council
of Shopping Centers' annual convention in Las Vegas. "I
can't tell you if it's June 29 or Aug. 1."
The dearth of new supply should help the housing market
find a bottom, Zell said. U.S. home builders have been
forced to severely scale back on new homes, to an
estimated 350,000 this year at current construction
rates from 1.7 million in 2006.
Zell made a fortune in commercial real estate by buying
up distressed property in the early 1990s during a deep
downturn in the U.S. commercial property sector.
In 2007, he personally reaped roughly $2 billion when he
sold Equity Office Properties Trust to Blackstone Group
for about $23 billion. That sale is seen by many real
estate investors as the top of the U.S. commercial real
estate boom.
Since then, U.S. commercial real estate prices have
fallen about 15 percent to 20 percent and are expected
decline by similar amount before bottoming out. The
frozen credit markets have made valuing U.S. commercial
real estate difficult because the lack of funding for
debt financing has resulted in very few sales.
The U.S. recession has taken its toll on the shopping
center industry. At the conference, which in the past
served as a place where retailers and landlords met to
discuss new leases, the talk has been about bringing
property owners needing cash together with opportunistic
buyers, said Anthony Buono, executive director at CB
Richard Ellis Group Inc <CBG.N>, the world's largest
real estate services company.
U.S. retailers and property owners may get some relief
if the housing market leads a recovery by giving U.S.
consumers more clarity about the value of their homes,
their No. 1 source of wealth.
"That will be very positive for retail sales," Zell
said.
Yet those sales are unlikely to mirror the spending boom
of a couple of years ago.
"I think the days of extraordinary expenditures without
regard to cost to keep up with the Joneses is less
likely a case going forward," Zell said. "I envision a
slow unclogging of the worldwide financial system, which
ultimately will be positive for all of us."
But his recovery scenario could be scuttled by risks
such as U.S. tax policy, the escalating U.S. class
warfare seen during the rescue of U.S. banks, as well as
the bankruptcy of U.S. automaker Chrysler Holding LLC
[CCMLPD.UL]. The huge expenditure of U.S. healthcare, as
well as anti-globalization sentiment and trade risks
could also derail a recovery.
"This is a worldwide recession and not a U.S.
recession," said Zell, who has invested in Mexico, South
America, Egypt, China and other parts of the world
through his private investment firm Equity
International.
"But the U.S. will recover and recover first around the
world because we have a culture and we have an
environment where we face up to reality quickly and
effectively as opposed to many other counties in the
world which create zombie environments because they are
not able to face up to reality," he added. (Reporting by
Ilaina Jonas; Editing by Andre Grenon)
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