Rene G. Boisvert, principal and owner, Boulevard Equity Group

As published in Scotsman Guide's Commercial Edition, July 2005.

Many of us have hypothetical crystal balls, which we use to predict the future. For many, the 2005 real-estate market has looked cloudy. A deeper gaze into our crystal balls shows that it is only a matter of time before we see price corrections in the real-estate marketplace.

Some say that interest rates will continue to increase, prompting a price drop. Ken Rosen, a University of California at Berkeley professor and chairman of the Fisher Center for Real Estate and Economic Development, used his crystal ball to start a hedge fund of real- estate-related stocks. The hedge fund bets against the future of real estate and was established to sell short its real- estate-stock investments.

Rosen invested millions of dollars in an upcoming real-market correction. He believes California’s Bay Area already had a housing bubble, which is now bursting. With the Federal Reserve signaling a rise in interest rates, Rosen and others believe it is only a matter of time before real-estate prices decrease.

Interest rates can offset any marketplace phenomenon. In the past few years, they have sustained historic lows, which have resulted in a flurry of real- estate-purchase financing and refinancing. After Sept. 11 and the Nasdaq crash, Federal Reserve Chairman Alan Greenspan predicted a U.S. recession, so he created a shallow one. He offset a true recession by keeping interest rates low.

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