Friday, January 24, 2014

Despite Optimism, Employment Trends Remain Disconcertingly Weak via

Optimism is trending in real estate circles. On the conference circuit, there’s talk of rising prices, easier access to financing, and higher rents. Lending standards are easing. Lending volume is growing faster than borrower quality is improving. We've moved from recovery to expansion.

What’s behind the bullish assessments and tilt in risk-taking? Artificially low interest rates and investor and lender competition have certainly aided in recouping lost property value; that process is largely complete for top tier assets in prime metros. In the arena of property fundamentals, however, it’s not a demand-driven recovery. The tally of occupied office and industrial space is slowly returning to its pre-crisis peak, so our buildings are no doubt feeling more full. But that doesn’t reflect momentum in job growth as much as a slow recovery of lost jobs and an absence of significant new construction. While sentiment and perceptions are shifting, the job market remains a weakest link in the recovery, constraining the medium-term outlook.

Read more...Despite Optimism, Employment Trends Remain Disconcertingly Weak - Chief Economist Article -

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