Changes afoot within the broader real estate market
It's finally happening. The recent repeated warnings of economists and market watchers expected the housing boom of the 2000s is winding down. The current information is filled with reports about slowing existing home sales, increasing selections, longer selling cycles and lower asking prices.
Therefore if the housing market finally seems to be cooling down, commercial real estate investors should take notice. Heres why: There is a powerful relationship between the boom and the fitness of the four key commercial sectors retail, multifamily, office and professional. Rising home prices and low-interest rates have enabled countless homeowners to obtain home equity loans and cash-out refinancing and the resulting prosperity impact has percolated through the economy.
The major beneficiary was retail property, where owners of malls and shopping centers have observed appraisals increase, along side retail receipts. The growth also has helped drive development in commercial development, specially on-the West-coast, to deal with incoming Chinese goods. It's also bolstered office occupancies in hot residential areas as the mortgage company expanded. Finally, the housing boom has whipsawed multifamily properties, first crushing occupancy rates as renters became owners and now improving occupancy rates while the property craze cull units in the rental inventory. If you are interested in finance, you will probably require to learn about discount http://www.blueskyestateservices.com/services/.
Changes are afoot. Existing home sales fell 2.7-litre last month over double the 1.1% that analysts expected in September and 2.87 million unsold houses are actually available on the market (which represents the greatest unsold stock since 1986, reports the National Association of Realtors). Even David Lereah, the chief economist at the National Association of Realtors (NAR), reported recently that the housing field has passed its peak.
With home-equity income running dry, homeowners will reign in retail spending next year. To research additional information, we understand people check-out: the internet.
This could materially impact retail REITs, especially those with large holdings in markets such as Southern California and the cities. Based on PricewaterhouseCoopers most-recent Emerging Trends In Real Estate 2006 statement, the only element that may keep consumer spending afloat are wage increases. However, energy prices and rising mortgage rates could zip pocketbooks. Retail has every one of the risk.