Positive Forecast For Real Estate Markets
Steady Gains Predicted For Next Three Years
The Urban Land Institute predicts "favorable" conditions for the next three years for all real estate markets, including residential and commercial.
Real estate markets will continue making steady, though not spectacular, gains through the rest of 2015 and all of the next two years, the Urban Land Institute Center for Capital Markets and Real Estate reported recently.
Twice a year, the ULI releases a Real Estate Consensus Forecast, basically a set of predictions that looks three years into the future about the residential, commercial, industrial and other real estate markets.
The ULI derives its information from a survey of leading economists and analysts, and executives of real estate investment, advisory and research firms. The ULI said its latest report isn't quite as bullish as the forecast it released in April, but it does predict three more years of "favorable real estate conditions."
Single-family housing starts will increase to 745,000 in 2015, 842,000 in 2016, and 900,000 in 2017, but still remain below the 20-year average, the ULI said in its most recent report.
Home price increases are expected to slow over the next three years, from 5.0 percent in 2015, to 4.3 percent in 2016, to 3.9 percent in 2017. ULI's April report predicts a more upbeat assessment of housing starts in 2015 and 2016, while the forecast for 2017 is unchanged.
Commercial real estate prices are projected to rise by 10.0 percent in 2015, and then drop to a 6.0 percent increase in 2016. Price growth will decline farther in 2017, to 4.5 percent.
Widespread Spending Gains in All Building Sectors
Construction spending data for the month of August clearly show a building boom is well under way, the Associated General Contractors of America reports.
"There were widespread monthly and year-over-year gains in August for all major construction categories - private nonresidential, residential and public," Ken Simonson, chief economist for the AGC, said. "Activity in all three categories has been accelerating recently and should continue rising into 2016."
Simonson cautioned, however, that this can only happen if contractors are able to find enough workers with qualified building trades skills.
Construction spending in August came to $1.086 trillion, the highest spending amount since May 2008. This is 0.7 percent above the July total, and 13.7 percent better than August 2014, which is the best year-to-year result since March 2006.
Private nonresidential spending in August grew 0.2 percent from July, and is up 16.9 percent compared to the same month in 2014. Private residential spending increased 1.3 percent for the month, and 16.1 percent year-to-year. Public construction spending rose 0.5 percent from July to August, and has expanded 7 percent from a year ago.
"There has been exceptionally strong growth in manufacturing, lodging and apartment construction all year," Simonson said. "More recently, office, health care, highway and educational structures have rebounded as well."
AGC officials cautioned, though, that 86 percent of construction firms reportedly are having a hard time hiring qualified workers, shortages that are likely to worsen as demand for building services grows.
"While it is great to see growing demand for construction, many firms won't benefit if they don't have enough workers to get the job done," Stephen E. Sandherr, chief executive officer of the AGC, said. "Without a better approach to attracting and preparing future construction workers, construction projects are likely to get more expensive and take longer to complete."