Question Details

Infinity Rea…,  in Saratoga, CA

What does this Mean for You? If it means anything.

Asked by Infinity Realty Network, Saratoga, CA Tue Dec 11, 2007

I guess ill ask this again i guess all those on trulia are not much for watching the Market, as i asked this and received no response.

Morgan Stanley buys Billion dollar portfolio from Lennar Homes.
"The portfolio originally valued at $1.3 billion will be sold to a joint venture for just $525 million. Morgan Stanley will have an 80% stake in the "joint venture" with Lennar retaining a 20% stake. The properties in question consisted of a collection of raw undeveloped land, partially developed homesites and finished homes."

What does this purchase have to do with the Market? Me myself if The big Boys like Morgan stanley are stepping in to buy at discounts, we might be close to bottom.

Help the community by answering this question:

Answers

4
Don't think it's as simple as that. $500M is a drop in a bucket (o.k. maybe not quite that), for Morgan Stanley, but yes, it does show that they are willing to pay 40% of listing value for a property - although a lot are vacant land and unfinished homes and those kind of property do get a beating. But Lennar is also retaining 20% of the properties and has a first right of refusal to purchase the homes at market value as well as sharing in future earnings; so the deal is worth more than the 40% they are paying to Lennar. They also have to put out capital to finish the project if so choose.

But yes, it does show a willingness for the big, conservative guy to purchase real estate but at what price? Also, those are new homes instead of resale; which is also different. Are we at the bottom yet? I’d think close, not because of this, but because of what I see on the market, during my open house, traffic and local statistics; coupling with the presumed relief, ever so slight, by the mortgage bail out, yes the atmosphere and outlook is much more uplifting than before :-))

Sylvia
1 vote Thank Flag Link Wed Dec 12, 2007
Sylvia Barry,…, Real Estate Pro in Marin, CA
MVP'08
Contact
Good point 'ol chap! Yes. Indeed. We are seeing similar transactions popping up in the Greater Boston Area. I have been following "chunk" purchases and it is starting to show up. Speculative???? YES. Big boys doing it??? YES. The can afford to do stuff like this? What are you looking to do? by for yourself or be speculative but on a smaller level? if you can afford to be speculative, put it in 5th gear. If you are buying for yourself, then ther is never, never a bad time to buy over the long-term.
1 vote Thank Flag Link Wed Dec 12, 2007
It means that a combo of dirt, empty homesites, half built homes and some inventory homes is worth about 40 to 50% of its inflated peak value. On top of the purchase price, a lot of really expensive lumber and other stuff will have to bought to recoup much of that investment, We are closer to the bottom than the top.
1 vote Thank Flag Link Wed Dec 12, 2007
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
Contact
I agree. We talk abut "not having a crystalball" when clients ask the "are we at the bottom" question. When the big boys step up to the plate like this, do we really need a psychic to interpret this for us?
Web Reference: http://www.cindihagley.com
1 vote Thank Flag Link Tue Dec 11, 2007
The Hagley G…, Real Estate Pro in Pleasanton, CA
MVP'08
Contact
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2016 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer