Market Overview

Experts Expect Real Estate Sector To Rebound Further

Experts Expect Real Estate Sector To Rebound Further

More signs that the real estate sector not only has a pulse, but may be reviving.

A new survey of several dozen economists and industry analysts by the Urban Land Institute and EY suggests continued improvement in fundamentals for both U.S. commercial real estate, as well as the housing sector.

According to the report, the volume of commercial property transactions will reach $430 billion by 2016, above 2006 pre-recession levels. The number of commercial mortgage-backed securities (CMBS) – secured by the loan on a commercial property and considered an important source of financing – is also expected to rebound and grow through 2016.

Related: Chinese Buyers Enthusiastic About U.S. Real Estate

And while single-family home starts reportedly fell to a 50-year low in 2011, the report notes the following two years were positive ones for the housing sector. Those housing starts are expected to increase to over 742,000 this year, 850,00 next year and around 900,000 in 2016. That being said, the 2016 projections are still below the 20-year annual average.

“Although we’ve made significant improvement over the past year, the recovery has been uneven globally,” Howard Roth, global real estate leader for EY, said in a press statement, “and many risks still exist, including high global unemployment, high government debt, deflationary pressure in advanced economies, weak domestic demand, capital flow volatility in emerging markets and the potential impact from Fed tapering in the US. Still, all signs point to a continued gradual improvement in both the economy and real estate market fundamentals.”

Respondents to the ULI/E&Y Real Estate Consensus Forecast, meanwhile, remained optimistic about the nation's general financial future – with expectations the overall economy will continue to expand. The respondents reportedly predict GDP to grow by 2.8 percent this year, and 3.0 percent in both 2015 and 2016. They also expect the nation's unemployment rate to drop to 5.8 percent by the end of 2016.


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