Multi-Family Housing Shows Fragility During Its Recovery Phase

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Pangea Properties President Discusses Housing Market Volatility

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The U.S. Census Bureau and HUD announced last week that housing starts took a dip in the month of June, an unexpected turn of events as the housing market saw a boost in production in previous months. The report comes at a time when instability in the economy is rampant, and disappointing numbers are cutting down hopes of a sustained economic turnaround in the U.S. Growth appears to be stalled as recent economic reports have failed to meet expectations, discouraging economists from maintaining an optimistic outlook.

“The disappointing numbers from June aren’t necessarily indicative of what’s to come for the multi-family housing market,” says Al Goldstein, President of Pangea Properties. “Just as in the stock market, one month’s numbers don’t always reflect the big picture, and if anything it shows that the fluctuation from month to month is a sign of volatility in the market. Based on that instability we can’t call this a full recovery, just yet, because of the fragility of the market.”

Goldstein continues to explain how the false signs of recovery, along with low yields in the capital markets, encourage uneducated investors to pour money into the housing market, creating higher price points that aren’t necessarily in line with property value. Goldstein believes that these actions create a slippery slope in the housing market and that it could be detrimental to its stabilization.

“The dip in multi-family construction shows caution in the market and is an obvious sign that people are uncertain about where this wave of building is coming from,” continues Goldstein. “We’re confident in the strength of the market but cognizant of the signs of instability. At Pangea we are dedicated to investing in properties by adding long-term value to the buildings we purchase as well as stabilizing the neighborhoods we move into. We think those are key ingredients to the success of the housing market, along with a more gradual progression of building and construction that eliminates the sharp ups and downs we’re seeing now.”

About Pangea Properties:
Pangea Properties is a private real estate investment trust (REIT) targeting the distressed residential multi-family real estate market. Pangea was founded in 2008 by Al Goldstein and Steve Joung with one mission: to bring service, value and care to its residents. The entrepreneurs saw an opportunity in the Chicago market to create a real estate firm that serves as both the property owner and the building manager, utilizing a call center to support the high bar for service and scalability. Today, Pangea has over $250 million into 8,000+ apartment units throughout Chicago, Indianapolis and Baltimore, with the goal of continuing to expand within current markets as well as into new markets. Pangea has been highlighted by several media outlets including WGN TV, Chicago Magazine and the Baltimore Business Journal, among others. Pangea’s founder Al Goldstein has been named one of Crain’s 2013 40 under 40 and is a recipient of the Ernst & Young Midwest Entrepreneur of the Year. For more information, visit Pangea online at http://www.pangeare.com, http://www.Facebook.com/PangeaRE, http://www.linkedin.com/company/pangea-properties or on Twitter @PangeaRE.

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Carolyn Blackman

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