Stewart Hsu

For those of you who are not yet familar with Sam Zell, he is *the* billionaire real estate investor. His net worth is an estimated $6 billion (twice that of Donald Trump). He is ranked #52 on the Forbes 400 Richest Americans 2007. Zell was born in Chicago in 1941 to Jewish immigrant parents from Poland who fled the country just before the Nazi invasion in 1939. He’s one of the true gurus in real estate and seems to have an uncanny ability for making the right moves at the right time (i.e. predicting market cycles). Zell is definitely one to watch if you are a serious real estate investor / entrepreneur.

I saw a recent Reuter’s posting from 12/12/07 which is included in full below. It’s worth a read. A key comment Zell made was that as long as unemployment stays below 5.5% we’ll be in decent shape. Once again, it all comes back to jobs.

I had no idea what the unemployment trends were in the U.S. so I looked them up. Here is the U.S. National Unemployment Rate chart I pulled from the U.S. Department of Labor, Bureau of Labor Statistics website. This covers the time period from Jan 1997 to the present. The verticle y-axis, is % unemployment; it shows us currently at a 4.7% unemployment rate.

Here’s the full Reuter’s article:

By James B. Kelleher, Wed Dec 12, 2007 4:49pm EST

CHICAGO (Reuters) - Billionaire investor Sam Zell on Wednesday compared the current credit-fueled crisis in U.S. real estate to the savings-and-loan meltdown of the late 1980s but said it was a “manageable” problem that would not drag the wider economy into a recession next year.

Speaking at an event here hosted by the Executives’ Club of Chicago, Zell, who made his fortune in real estate, also predicted the U.S. property market would begin to recover modestly in 2009.

“I don’t see any robust change,” he said. “I also see no disaster going forward.”

Zell, 66, acknowledged that the credit crunch had “dramatically stopped all new commercial construction,” but noted that the current environment was good for owners of commercial real estate.

“Commercial real-estate has always been (about) supply and demand,” he said. “If you own the assets, those assets are going to benefit from the fact that there’s little new supply and existing supply will be limited.”

Zell said the key to the housing market’s health going forward would be the strength of the U.S. job market. He expressed confidence that as long as unemployment rate stays below 5.5 percent, it was “very, very unlikely” that the subprime contagion would spread.

“The subprime mess is a mess,” he said. “It’s not much bigger in my opinion or much smaller than the savings-and-loan crisis. Hopefully we will be able to address the problem equally as well.”

(Editing by Richard Chang)