NEW ORLEANS -- The U.S. real estate market is headed for another tumultuous year, burdened by an ongoing slump in market values and new construction, according to many industry executives and economists.
Economists for the National Association of Realtors, which is holding its annual convention here, believe that both the residential and commercial markets will worsen before getting better, with the commercial arena bearing the brunt of the damage. Only the optimists called for a recovery to begin as soon as the third quarter of 1991.
Roger Brinner, executive research director for DRI/McGraw-Hill, said he is prepared to tell convention participants in a panel discussion that "1991 will probably be as awful as they can imagine."
There are pockets of resilience in real-estate markets around the country. But in general, Brinner and others said 1991 will look much the same as this year, in which real estate took a beating by almost every measure available.
Robert Rosenblatt, an economist for the Mortgage Bankers Association of America, said his group expects housing starts to fall 12 percent in 1990 to 1.215 million units, and then fall another 9 percent in 1991, to 1.11 million, before recovering in 1992.
Commercial real estate has taken such a beating that market experts are more cautious about predicting a recovery there. "Of course, nobody likes to predict long-term -- like more than three months," said Eric Stevenson, senior staff vice president for the Mortgage Bankers Association.
Among regional activity, analysts labeled the Mid-Atlantic area and California as the next two trouble spots.
California is suffering from an ongoing downturn in the semiconductor and defense industries, despite possible short-lived gains in the latter sector that could result from the Persian Gulf crisis, analysts said.
Troubles in the Northeast are far from over, with further cuts expected in the computer industry in Massachusetts and the insurance industry in Connecticut, the analysts said. The financial industry in New York is not likely to hit bottom until sometime next year and Philadelphia's fiscal problems have been well-documented.
The Northwest is the one bright spot, the analysts said. It continues to capitalize on its access to Asian export markets as the dollar continues to weaken.
The Southeast is mixed, with Atlanta holding up fairly well but southern Florida, from Palm Beach to Miami, is weakening quickly, said David Shulman and Tom Hanley, real-estate analysts at Salomon Brothers Inc.
The Oil Patch, already recovering before the Persian Gulf conflict began, got a boost from the higher oil prices that resulted from the conflict. It could continue to recover even if oil stabilizes at $26 per barrel, the analysts said. However, the region's recovery will be slowed by liquidations of seized properties by the Resolution Trust Corp., Shulman and Hanley said.
The slowdown in the Midwest will not be so acute, the analysts said. The region went through a painful contraction in the late 1970s and early 1980s, and did not participate to a large degree in the go-go development of the mid- and late-1980s.
While pockets of economic health exist -- in Columbus, Ohio, for example -- Shulman and Hanley said they are concerned that incomes in the Midwest have not kept pace with job creation.