Categorized | Investing

Hard Times in Global Real Estate Market Could Last Years

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According to the most recent reports from the International Monetary Fund, or IMF, the global real estate market will likely continue to struggle through the next decade. The IMF has identified countries such as the United States, Ireland, and Spain as the most problematic areas with respect to this reported downturn.

While there have been conflicting reports regarding the real estate sector of the United States economy, the latest report from the IMF seems to side with the negative outlooks. Part of the reasoning for their dismal perspective is that, unlike in the past, residential real estate investments continue to struggle with the depressed economy.

While there are a number of factors contributing to the struggles, the one that stands out is the relationship between housing prices, and household debt. Areas with the highest unemployment rates appear to be hurting the most. However, there are other factors that also serve as major threats to the future of the real estate market. With many loans underwater, there are few refinance options available. Lending conditions may soon tighten again, and there is the possibility of a double-dip recession in the real estate sector.

Commercial real estate, too, is having its own share of problems. With a record high in delinquency rates, and vacancy rates that continue to rise, troubled waters seem almost certain for the not too distant future.

While there is always hope for a turnaround, this recent report from the IMF cannot serve as good news for the leaders of each identified nation. Many of the mentioned countries are running incentive programs, but it is believed that such programs will only have a temporary effect, and thus will provide only limited success.

 

 

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About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

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