The climb out of the real estate depression will be a long, slow one for all but one market sector: apartments, according to the annual Emerging Trends outlook report.
The multifamily niche gains high marks in the 33rd edition of the report, which is one of the most highly regarded in the industry. “Everybody loves apartments,” said author Jonathan Miller. “The rest of the landscape is underwater.”
The report found investors concentrating on just a handful of “wealth islands,” notably diversified, 24-hour gateways located along global trade groups. “Otherwise,” it said, “capital generally avoids the surrounding sea of mostly commodity real estate.”
But even in such places as New York City, Washington, D.C., San Francisco and other “safe-bet” markets “where the nation does most of its business and the affluent settle,” the reports warns of a “slow-going grind” because stubbornly high unemployment results in delays filling office space and a lack of consumer spending that is a drag on retail and industrial space.
The survey is based on the opinion of 950 investors, developers, lenders, consultants and property company representatives. About 275 were interviewed face-to-face during the late summer to early fall, while the rest completed online surveys.
Miller, an independent consultant who has written the Emerging Trends report for more than 20 years, told reporters at ULI’s Fall Meeting in Los Angeles that “next year is not going to be as strong as our industry would like.” While there is plenty of capital flying around, he said, the lack of fundamentals is keeping it from landing.
“It’s a real estate market with too many dollars for too few opportunities,” one respondent told the surveyors.
Interviewees mentioned a bakers’ half-dozen of concerns that still weigh heavily on real estate, especially on the demand side. Perhaps No. 1 among these “anchors” is the continued loss of American jobs to workers in other countries. And a close second is improved productivity, which may help companies fatten their bottom lines but at the same time leads to reductions in hiring and a demand for space.
“Real estate needs jobs to recover,” commented Stephen Blank, ULI Senior Resident Fellow for Real Estate Finance.
Daily Briefing | Thursday, October 27, 2011
FHFA Trims Estimate on the Ultimate Cost of the GSE Bailout
The Federal Housing Finance Agency Thursday morning released new estimates on the ultimate cost of bailing out Fannie Mae and Freddie Mac, cutting its worst case scenario projection to $311 billion from $363 billion.
Another Sign That Multifamily is Hot: Fannie MF Issuance is Rising
During the first nine months of the year Fannie Mae issued $16.7 billion of multifamily MBS, already surpassing its volume for all of last year.
Top Title Insurers Earn Money And See Revenues Per Order Increase
The nation’s second largest title insurer, First American Financial Corp., earned $21 million in the third quarter, a 36% decline compared to the same period a year ago as revenues fell 3% due to a decline in title premiums.
Final FHA Figures for FY Show a Decline in Business
The Federal Housing Administration endorsed $217.8 billion of ‘forward’ single-family loans in fiscal year 2011, down 27% from the previous year, according to new figures released by HUD.
Trustmark Opens New Alabama Office to Support Growing Mortgage Business
Trustmark National Bank, Jackson, Miss., has set up a new mortgage lending shop in Birmingham, Ala., to serve its growing retail and wholesale customer base in the state.
Economist Sees a 3% Rise in Home Values — by 2013
After dropping 1.5% in 2011, home prices should be flat next year and finally gain traction in 2013, according to Macroeconomic Advisers chairman Joel Prakken.
Freddie Mac to Get New Chairman, CEO
Both the chief executive officer and the chairman of the board of Freddie Mac are stepping down within the next few months, the Federal Housing Finance Agency said late Wednesday.
Mortgage Rates Hover Near Record Lows
The average rate charged on most mortgage products remained relatively stable for the week ending October 27, hovering near their recent lows, according to figures compiled by Freddie Mac.
Pending Home Sales Dip Again
The number of consumers who signed contracts to buy homes fell for the third straight month in September after the traditional spring/summer buying season failed to entice many new buyers.