Conversations with a real estate broker

Just had coffee with an institutional real estate broker. It appears that deals are currently hard to close as buyers remain cautious and unwilling to pay up, while sellers have yet to capitulate and are not moving their prices down.  Financing is not an issue, but a mismatch in pricing and risk expectations is.

It thus appears that risk tolerance remains low and investors have yet to throw caution to the wind, IMO. As such, this reduces the probability that we are in bubble territory on the real estate front. Having said that, questions remain as to how much upside remains on the table for real estate.

It is similarly important to figure out the downside, which nobody has a good answer to. What is only clear though is that people currently still have funds on the sideline and an intention to buy at a lower price, which may provide support on the downside.

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