Real Estate Market Commentary - February 2012
Commentary on the Real Estate Market as of February 2012
By Peter L. Zachary, MAI, MRICS
by Peter L. Zachary, MAI, MRICS
Good news on the job front. And don't forget jobs translate into spending and housing price increases. On February 4, 2012, the front page of the New York Times has a lead article entitled "Jobless Rate Falls to 8.3%, Altering Face of Campaign".
The article talks about how the unemployment rate in January 2012 is 8.3% down from 10% in late 2009. This 8.3% is the unemployment rate that was in effect when President Obama took office. The article state the economists were surprised by the new numbers which showed a gain of 243,000 jobs in January.
The article said:
"The economy has now been gaining strength for almost six months, according to a broad array of data, offering some reason for hope that the effects of the deep financial crisis are finally starting to fade.
Still, the economy will need several more years of strong job growth to return to anything resembling full health."
And the New York Post had an article in its Business section entitled "Numbers Tell Two Sides of Employment Story". The article stated:
"The good news for millions of out-of-work Americans: Job prospects are improving, with the unemployment rate showing a surprise drop to a three-year low of 8.3 percent. The bad news: Many jobseekers may have to settle for lower-paying jobs and even then may have to wait another two or three years to find work. 'The economy and jobs market are on better footing, but it's too early to crack open the champagne,' says Steven Ricchiuto, chief economist at Mizuho Securities USA."
On February 25, 2012, the New York Times had a front page article entitled "Homes Aren't Selling, but in Apartments, It's a Landlord's Market". The article talks about how the rental market for apartments is increasing because buyers don't feel home prices have stabilized or will go up soon. The article states that rents are up 2.4% in January according to data released by the Labor Department.
"We are more of a renter nation than we have been for a while" the article quotes Christopher J. Mayer, a professor of real estate at the Columbia Business School. The article states "the home ownership rate has been falling from its peak of 69.4% in 2004 to 66% in the 4th quarter of 2011." That means about 2 million more households are renting, said Kenneth Rogen, an economist and professor of real estate at the Haas School of Business at the University of California, Berkley.
The article states:
"During the economic downturn, apartment developers retrenched. The number of new apartments completed fell from 284,200 in 2006 to less than half that number in 2011, according to census data.
The limited supply is pushing up prices in some markets. In San Francisco, rents jumped close to 5 percent last year, according to Reis, and increases averaged 3 percent in Austin and New York. Landlords have also been withdrawing incentives like a free month's rent.
Many now wonder about a more profound shift among future buyers. Matt Byford, a 24year-old litigation consultant in Chicago, acknowledges that low interest rates and low prices favor buying. But he says he is renting and in no hurry to buy, because he doesn't expect much to change soon.
Brad Forrester, chief executive of the ConAm Group, which manages about 50,000 apartments in the western United States, says, 'I think it's going to be interesting to see whether there's been a fundamental sociological shift in that 20- to 35-year-old cohort, where they literally say 'this American dream just doesn't work for me.'"
I have never heard that expression but maybe the "American Dream" of homeownership is now something that belongs in the past.
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