STEIN & FRED ADAMS, DIRECTORS, REPUBLIC FINANCIAL CORPORATION
POINT Clearly, the U.S. has
experienced a tepid economic recovery
and various market indicators remain in
flux. However, many signposts point to
an identifiable distressed market
recovery that signals that 24 months or
less remain for distressed cycle
investment opportunities for the middle
market. For starters, the housing market,
arguably the force driving down the U.S.
economy, is showing signs of life.
Recent Case-Shiller Index readings
show home prices are increasing;
housing inventory, at about six months,
is at the fulcrum level of recovery; and
default rates on home loans are at
three-year lows of 5.5 percent,
according to TransUnion.
COUNTERPOINT Looking at the
current cycle, multiple indicators show
distressed opportunities will likely be
available for the next three to four years.
There have been multiple false starts in
the housing recovery, both in terms of
inventory and pricing. Shadow
inventory of foreclosed homes could be
as high as 1. 25 million units.
Foreclosures continue to sell at
significant discounts— 35 percent is not
uncommon—resulting in sustained
pressure on any housing correction.