Stable Growth for Real Estate Expected for 2015 through 2017

Dated: August 1 2015

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The real estate industry is expected to have solid growth for this year that will lead up to 2017 according to the new Real Estate Consensus Forecast, a survey of leading real estate economists and analysts conducted by the Urban Land Institute (ULI) Center for Capital Markets and Real Estate. ULI is a non-profit education and research institute supported by its members. Although factors like economic downturns, interest rate spikes, over supplies, or foreign crises could potentially hinder the stability of the market, it is to be concluded that overall, real estate in the United States is predicted to have three more years of solid ground.

Highlights on real estate and overall economy that have the most positive impact for the next three years:

 

  • Single family housing sector has had positive growth for the third year straight in 2014 and starts are projected to increase from 647,400 units last year to 700,000 in 2015; 815,000 next year, up to 900,000 units in 2017. Though still below the 20-year average.
  • Home prices increased by 5.4% in 2014 and are expected to be at 5.0% in 2015, and 4.0% in 2016-2017.
  • Commercial property transactions are expected to increase for another two years and level off at a strong $500 billion in 2017.
  • Demand for real estate, especially for office and apartments will remain strong. Apartments will show consistent rental rate growth above the 20-year average of 2.6%. This year, rent is expected to rise by 3.5%, 3.0% in 2016, and 2.7% in 2017.
  • Decline in unemployment rate at 5.3% by the end of 2015, 5.0% for 2016, and 5% for 2017. Net job growth is expected to be 2.9 million per year compared to a long term average of 1.2 million.
  • Increasing treasury rates will also increase borrowing costs for real estate investors. However, the respondents do not anticipate it to considerably affect real estate capitalization rates for investments.

Questions or comments? Email us at Team@KimBarberGroup.com or call 703-338-0872

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Kim Barber

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