RE Expert Foresees MF 'Bloodbath'

A real estate expert is predicting a "bloodbath" in the apartment market when investors finally realize that they cannot reap the returns they expected.Bret Wilkerson of PPR, a real estate forecasting firm in Boston, told a Federal Deposit Insurance Corp. conference that the apartment market is the "scariest place in the real estate market today." He noted that properties are overpriced nationwide, vacancy rates are above 7%, and owners cannot push up rents because of supply-and-demand problems. Nevertheless, investors keep pouring money into the sector because they believe it is safe. "In the next six to 12 months, we are going to see a bloodbath in the multifamily market," Mr. Wilkerson said, as investors pull their money out of the sector. Other presenters at the FDIC's commercial real estate conference indicated that they have not seen any problems in financing acquisitions or refinancing multifamily loans.