- August 2008 Vol. 20 No. 8

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When the Price Is Right: Analyzing the Market in Times of Uncertainty

by James Valente, Jeffery Munger

We are one year into the credit crunch. Housing prices across the United States and in many other markets are falling, and everyone from chief economists to the general population is debating if the economy is in a recession yet. For investors it all adds up to a lot of uncertainty. How will these forces combine to affect the values of your investments? What kind of returns will you need to stay on top?

One thing we do know is that the availability of low cost, high LTV debt is gone, and most likely will not come back at the levels it was previously available. To a degree, this has already affected the pricing of commercial real estate, but other forces, including the changing outlook for the U.S. and global economies and the way investors are reassessing risk, are still playing out.

In the article that follows, we help investors judge when the price is right by looking at the long-term real return investors should receive for investing in private equity real estate an

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