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The Beginning of the Middle Inning: Housing on Strongly Paved Road to Recovery, New Research Shows

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By Zoe Eisenberg

Housing is on the way up, according to new research from The Urban Land Institute (ULI) and PwC. The recently released report, Emerging Trends in Real Estate®, focused on the key trending industry outlooks for the year ahead, which the report predicts will be a bright one.

According to the report, 2014 will be the “recovery from the recovery,” and the focus will shift to overlooked markets and property sectors as well as value-added strategies.

Key drivers for 2014 are the expected improvement of both industry profitability and interest rates. Additionally, markets are expected to be “well supplied” with both equity and debt capital, and the dependence on cap rate compression to drive value will be replaced by an emphasis on asset management.

The report showed a returning strength of the secondary markets, especially those associated with financial crisis, like Atlanta, Miami, and Vegas..

“In 2012, it was the beginning of the move to the secondary markets,” said Stephen Blank, Senior Resident Fellow for Real Estate Finance, ULI, in a webinar November 7.

“In 2013, we gained momentum, 2014 is expected to continue trends in employment (modest growth) and increasing demand for space,” Blank continued. “2014 interest rates are likely to go up. The industry is getting itself on a very solid footing financially.”

In terms of lending, there is an expected increase in interest rates which will make real estate lending increasingly attractive, and development and construction loans will become increasingly available for borrowers with strong credentials, the report notes.

“We’re in the beginning of the middle inning,” said Blank, who believes housing is on a strongly paved road to recovery, with sellers currently positioned better than buyers, and plenty of available equity capital.

To learn more of download the full Emerging Trends in Real Estate® 2014 report, click here.


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