The nation's beleaguered real estate market last month seemed suddenly reborn on Wall Street, where the stocks of home builders Kaufman & Broad Home Corp. and PHM Corp. spurted to yearly highs after the Federal Reserve Board cut interest rates sharply.
But on Main Street, where many office buildings and homes continue to languish unsold, the ravages of last year's real estate slump won't so easily disappear, experts say.
"I don't expect an upturn in real estate for several more months," said Richard Peiser, director of the Lusk Center for Real Estate Development, a nonprofit study organization.
"A year from now, the outlook should be a lot more positive for residential real estate than it is now," he said. "But the industry will continue to experience some sluggishness."
After a decade of growth, the nation's real estate market ground virtually to a halt last winter and, despite a brief upturn after victory in the Persian Gulf, hasn't moved much since. That's especially true in California and the Northeast, where widespread layoffs and a sluggish economy have chilled a decade of speculative fever that turned more than a few middle-income homeowners and shrewd real estate developers into a wealthy new class of landed privilege.
The effects have rippled beyond U.S. borders to foreign developers who bet heavily on U.S. real estate. Maruko Inc., the Tokyo-based owner of such prominent Southern California hotels as the Hollywood Roosevelt and Hyatt Grand Champions in Indian Wells, last year became one of the largest Japanese companies to file for protection from creditors after three years of aggressively expanding its U.S. real estate holdings.
Although the California economy is the nation's most diverse, with strong industries in agriculture, entertainment and international trade, some analysts predict that it may as long as a decade to absorb all the excess office space that has sprung up in Orange County and downtown Los Angeles.
Since 1987, for example, the office vacancy rate in greater Los Angeles has risen to 20.9% from 13.9%, according to Cushman & Wakefield of California Inc.
Likewise, home sales were so lackluster last year in California and most of the rest of the nation that even sharply lower interest rates haven't sparked a sustained rebound.
