Categorized | Commercial

Housing Markets Slowly Turning Around?

Housing Markets Slowly Turning Around?
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The past few years have been difficult for real estate sales and leasing, but things are slowly turning around. And although the upturn barely feels like one now, NAR Chief Economist Lawrence Yun assured commercial real estate practitioners on Thursday at the 2011 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington that the sector will continue to strengthen over the coming years. Yun stated, you might not “feel the impact of the recovery. The hole was so deep, it might still feel like we’re in a hole.”

Financing is the biggest problem for many potential buyers, but banks are stepping in and offering portfolio loans. Surprisingly, it’s not the large banks – Wells Fargo, Chase, Citibank, and Bank of America – offering these loans, although they are in a position to do so. Small local banks are the most likely place to find financing in the form of portfolio loans.

Currently, the largest concern is inflation. It remains low at 2.9 percent, but could rise as high as 6 percent by the early part of 2012.

Multi-family housing has been the standout of 2011 in the individual commercial sector. Rental rate is growing; look for 4 percent higher rates nationally by the beginning of 2012. These gains may ease in the next few years as residential sales are expected to take off as potential homebuyers respond to the higher rental rates.

In the coming months, vacancy rates in the office market are expected to decline steadily, from 16.5 percent in the first quarter of 2011 to 16 percent by the end of the year. The vacancy rate in the industrial market is expected to improve by as much as 2.5 percent by the beginning of 2012.

Though the retail market continues to struggle, this can be interpreted as a good sign as potential buyers are saving their money, promoting household stability.

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About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

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