Homeowners across the country have been dealing with serious financial woes in large part because of the real estate crisis. While they are finding it hard to acquire additional funds for housing, though, the opposite seem to be happening for real estate developers. And this is not because developers have been faring better than homeowners but only because the market seems to be dealing with short-term memory loss [1].

According to experts, developers who have defaulted and lost money on real estate gambles are still able to attract funding because plenty of money is just afloat the market. With the belief that the real estate market is about to pick up in 2011, deals are still being backed by hedge funds and private equity funds. New investors from as far as China and Norway are also looking at putting pension funds into real estate.

Larry Gluck and Ian Bruce Eichner are just a few of the developers who once failed and are now back in the real estate game. Gluck may have once defaulted on loans in Los Angeles, New York, San Francisco, and Washington but he has now purchased subsidized housing complex Tivoli Towers in Brooklyn and Windermere Hotel in Manhattan. Eichner, on the other hand, is now planning on rescuing troubled 50-story condominium One Madison Park even after defaulting in 2008 for a $760 million Las Vegas casino resort.

This is not to say, though, that developers have not had their share of casualties. Some developers who have been building their business for years – like West Coast real estate family scion Kent Swig – and some who have hitched on the real estate boom are now bombarded with lawsuits and impending personal bankruptcy.

Developer casualties have remained low, though, because most developers have preferred investing O.P.M. – other’s people’s money – while their own resources have remained untouched or minimally invested. Tishman Speyer Properties is such a great proof of that: while the company only suffered a $56 million loss on Stuyvesant Town and Peter Cooper Village, its lenders and investors had a damage of over $2.4 billion.

All these may seem like a crazy trend that cannot bode well for the future. But founder of real estate firm L & L Holding Company, David W. Levinson, differs and offers a simple explanation, “Capital is blind. It will go wherever it can for a return. That’s it in a nutshell.”

[1]http://www.nytimes.com/2011/01/02/realestate/02developers.html