Worried About Real Estate? Henry Cisneros Says The Future Is Bright

Worried about real estate? Don't be.

Former HUD Secretary Henry Cisneros says the future for all types of real estate development is bright - it just might take a few years to get there.

Cisneros was the keynote lunch speaker at the National Association of Real Estate Editors' 44th annual conference, which is being held in steamy Austin, Texas. (The weather today is in the 90s and rainy, making it feel a bit like a tropical rainforest.)

Cisneros is the executive chairman of CityView, an urban institutional investment firm which finances commercial and residential developers. The company has done more than $2 billion in transactions for 45 projects in 30 markets across 13 states.

That's a pretty good cross section of development in the U.S., but Cisneros was really keyed up about his recent trip to Shanghai. China, he said, has more than 100 cities with more than 1 million residents, and by the end of the next decade will have more than 250 cities with more than 1 million residents. Real estate in China, he seems to think, will continue to boom - despite talk of a massive housing bubble.

Back in the U.S., Cisneros said that we'll need "29 million new housing units by 2050." He complimented the Obama Administration on its efforts to revive the economy, though said efforts to modify foreclosures have fallen short.

(He also said that the government isn't to blame for pushing to increase the homeownership rate in this country, which isn't exactly how I remember it. I sat in on too many press conferences listening to too many officials tout the benefits of a high homeownership rate, and wrote about many of the programs that were created with the government's blessing to help minorities achieve a higher rate of homeownership. Many of these programs kicked into high gear in 2002 and 2003.)

Still, Cisneros maintained that we've "never had a recovery that didn't include housing," and he expects that this one might be the same, but thought that investors picking up real estate at today's bargain prices would have to plan to hold them for 5 to 7 years, which is why "Asia isn't interested" in buying real estate in the U.S. now.

"The time frame doesn't work for them," he added.

Then it was time for the obligatory Q&A session. Someone asked why Fannie Mae and Freddie Mac would allow someone who did a deed-in-lieu of foreclosure to get another loan in two years, but they'd have to wait longer if they were foreclosed upon or did a short sale.

Cisneros said he doesn't stay in touch with anyone from Fannie, Freddie, or FHA, but said that "clearly, more stringent lending standards are appropriate.....The right thing for banks is to be more careful" and return to common sense lending."

It's unclear to me why someone who did a deed-in-lieu is any less of a credit risk than someone who was foreclosed on or who went through a short sale.

But that's just one detail (out of a myriad) that no longer makes sense in the new world of mortgage finance.

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