Realtors Expo: CRE Markets to See Improvement in 2012, 2013
- Nov 14, 2011
November 14, 2011
By Nicholas Ziegler, News Editor
“Blame it on the economy” was the take-home message at last week’s Commercial Real Estate Business Trends Forum at the 2011 Realtors Conference & Expo – but there are bright spots on the horizon. According to Lawrence Yun, chief economist for the National Association of Realtors, relief for stressed markets should be coming in 2012 and in 2013.
According to Yun, the U.S. economy remains sluggish and continues to perform well below the desired pace of economic expansion. Still, he said at the current rate of growth, about 3 to 4 million jobs will be generated over the next 2 years. Additionally, Yun doesn’t forecast a second recession, primarily due to the “strong cash potential that businesses could release into the economy.” However, a majority of CRE sectors are still experiencing rising absorption and little improvement in asking rents.
One of the major questions still remaining is the performance of the multi-family sector. Unlike most other CRE areas, multi-family has seen an increase in asking rents, with absorption rates increasing and vacancy rates falling. Yun attributed the change to the changing dynamics in the home-buying markets, noting that the lack of available credit is keeping many out of the realm of purchase for the time being.
A separate session at the Expo, “Buyer or Renter Nation?” addressed the same question.
“We knew that homeowners, on average, accumulate more wealth than renters,” Ken Johnson, editor of the Journal of Housing Research, said at the session. “These findings indicate that homeownership is a self-imposed savings plan. Not everyone should own a home, but from a financial perspective, people who are planning to stay in a property over the long term can benefit from buying.”
Yun’s overall message agreed with Johnson, going on to further state that “increasing rents combined with low interest rates are enticing some individuals into the housing market.”
“I anticipate a small recovery in the next year in home values, which would help small business owners,” he said. “However, that’s only if legislators and regulations don’t add obstacles to hinder the housing market recovery, such as modifying or eliminating the mortgage interest deduction or increasing down payment requirements.”