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In a survey of real estate CFOs and senior comptrollers conducted by the Chicago-based financial advisory firm Allow Thornton LLP, only 12 percent stated their company will increase hiring in the next six months and almost two-thirds, 63 percent, plan to reduce bonuses.

Real Estate companies are also reducing health care benefits, 401k benefits, and stock options. Real estate firms are trimming the fat, even while the real estate market continues to show signs of improvement. Real Estate companies, according to the survey conducted by Grat Thornton LLP are most concerned about the cost of employee benefits.

While the Chicago Real Estate market is improving, these numbers illustrate an extreme contradiction in the real estate industry. While real estate companies remain optimistic about the future of their industry, cost slicing measures reflect a distinct pessimism in their own industry.

Is the real estate industry in a true recovery mode, or is a second micro-bubble emerging. As of right now, it is not clear, but there definitely a discrepancy between internal practices of real estate firms and gauges of the real estate market. Speculation surrounding real estate is always apparent. But is it beneficial when the speculation directly opposes the actions of Real Estate firms and brokerages?

So what can we learn from this contradiction? Is the market over-valued?  Is a secondary bubble forming after we slowly emerge out of the recession? Whatever the case, it is clear that the real estate market might still be over-valued, as firms still continue to cut costs, while the real estate market continues to improve.

Article by hello manty

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