Real Estate Trends and Outlook - Montana Association of ... · Real Estate Trends and Outlook ......

Real Estate Trends and Outlook

Lawrence Yun, Ph.D.Chief Economist

NATIONAL ASSOCIATION OF REALTORS®

Presentation at NAR Region XII Conference

Coeur d’Alene, ID

March 5, 2015

GDP Burstin 2014 Q2, Q3, Q4

-10

-8

-6

-4

-2

0

2

4

6

2007- Q1

2007- Q3

2008- Q1

2008- Q3

2009- Q1

2009- Q3

2010- Q1

2010- Q3

2011- Q1

2011- Q3

2012- Q1

2012- Q3

2013- Q1

2013- Q3

2014- Q1

2014- Q3

GDP Annualized Growth Rate

Jobs(8 million lost … 12 million gained)

124000

126000

128000

130000

132000

134000

136000

138000

140000

1420002

00

0 -

Jan

20

00

- J

ul

20

01

- J

an2

00

1 -

Ju

l2

00

2 -

Jan

20

02

- J

ul

20

03

- J

an2

00

3 -

Ju

l2

00

4 -

Jan

20

04

- J

ul

20

05

- J

an2

00

5 -

Ju

l2

00

6 -

Jan

20

06

- J

ul

20

07

- J

an2

00

7 -

Ju

l2

00

8 -

Jan

20

08

- J

ul

20

09

- J

an2

00

9 -

Ju

l2

01

0 -

Jan

20

10

- J

ul

20

11

- J

an2

01

1 -

Ju

l2

01

2 -

Jan

20

12

- J

ul

20

13

- J

an2

01

3 -

Ju

l2

01

4 -

Jan

20

14

- J

ul

20

15

- J

an

In thousands

Weekly New Unemployment Insurance Claims

250

300

350

400

450

500

550

600

20

00

- J

an2

00

0 -

Ju

l2

00

1 -

Jan

20

01

- J

ul

20

02

- J

an2

00

2 -

Ju

l2

00

3 -

Jan

20

03

- J

ul

20

04

- J

an2

00

4 -

Ju

l2

00

5 -

Jan

20

05

- J

ul

20

06

- J

an2

00

6 -

Ju

l2

00

7 -

Jan

20

07

- J

ul

20

08

- J

an2

00

8 -

Ju

l2

00

9 -

Jan

20

09

- J

ul

20

10

- J

an2

01

0 -

Ju

l2

01

1 -

Jan

20

11

- J

ul

20

12

- J

an2

01

2 -

Ju

l2

01

3 -

Jan

20

13

- J

ul

20

14

- J

an2

01

4 -

Ju

l2

01

5 -

Jan

In thousands

Unemployment Rate

0

2

4

6

8

10

12

20

00

- J

an2

00

0 -

Ju

l2

00

1 -

Jan

20

01

- J

ul

20

02

- J

an2

00

2 -

Ju

l2

00

3 -

Jan

20

03

- J

ul

20

04

- J

an2

00

4 -

Ju

l2

00

5 -

Jan

20

05

- J

ul

20

06

- J

an2

00

6 -

Ju

l2

00

7 -

Jan

20

07

- J

ul

20

08

- J

an2

00

8 -

Ju

l2

00

9 -

Jan

20

09

- J

ul

20

10

- J

an2

01

0 -

Ju

l2

01

1 -

Jan

20

11

- J

ul

20

12

- J

an2

01

2 -

Ju

l2

01

3 -

Jan

20

13

- J

ul

20

14

- J

an2

01

4 -

Ju

l

Household Net Worth at All-Time High

40000

45000

50000

55000

60000

65000

70000

75000

80000

85000$ billion

But Wait …

“I am not feeling it”

GDP Still not Robust … Below 3% for 9 straight years

-4

-2

0

2

4

6

8

10

19

50

19

52

19

54

19

56

19

58

19

60

19

62

19

64

19

66

19

68

19

70

19

72

19

74

19

76

19

78

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

GDP Annual Growth Rate

Sluggish Growth + Gap after Great Recession ($1.5 trillion gap … $4,700 per person)

10000

11000

12000

13000

14000

15000

16000

17000

18000

19000

1998- Q1

1999- Q1

2000- Q1

2001- Q1

2002- Q1

2003- Q1

2004- Q1

2005- Q1

2006- Q1

2007- Q1

2008- Q1

2009- Q1

2010- Q1

2011- Q1

2012- Q1

2013- Q1

2014- Q1

GDP in 2009 Dollars

Real GDP Real GDP W/O Recession

3% Growth Line

2.2% Growth Line

Employment Rate

54

56

58

60

62

64

66

20

00

- J

an2

00

0 -

Ju

l2

00

1 -

Jan

20

01

- J

ul

20

02

- J

an2

00

2 -

Ju

l2

00

3 -

Jan

20

03

- J

ul

20

04

- J

an2

00

4 -

Ju

l2

00

5 -

Jan

20

05

- J

ul

20

06

- J

an2

00

6 -

Ju

l2

00

7 -

Jan

20

07

- J

ul

20

08

- J

an2

00

8 -

Ju

l2

00

9 -

Jan

20

09

- J

ul

20

10

- J

an2

01

0 -

Ju

l2

01

1 -

Jan

20

11

- J

ul

20

12

- J

an2

01

2 -

Ju

l2

01

3 -

Jan

20

13

- J

ul

20

14

- J

an2

01

4 -

Ju

l

Renter Households over 10 years (Increased by 9 million)

25,000

27,000

29,000

31,000

33,000

35,000

37,000

39,000

41,000

43,000

19

80

- Q

11

98

1 -

Q1

19

82

- Q

11

98

3 -

Q1

19

84

- Q

11

98

5 -

Q1

19

86

- Q

11

98

7 -

Q1

19

88

- Q

11

98

9 -

Q1

19

90

- Q

11

99

1 -

Q1

19

92

- Q

11

99

3 -

Q1

19

94

- Q

11

99

5 -

Q1

19

96

- Q

11

99

7 -

Q1

19

98

- Q

11

99

9 -

Q1

20

00

- Q

12

00

1 -

Q1

20

02

- Q

12

00

3 -

Q1

20

04

- Q

12

00

5 -

Q1

20

06

- Q

12

00

7 -

Q1

20

08

- Q

12

00

9 -

Q1

20

10

- Q

12

01

1 -

Q1

20

12

- Q

12

01

3 -

Q1

20

14

- Q

1

In thousands

Homeowner Households over 10 years(Decreased by 1 million)

50,000

55,000

60,000

65,000

70,000

75,000

80,0001

98

0 -

Q1

19

81

- Q

11

98

2 -

Q1

19

83

- Q

11

98

4 -

Q1

19

85

- Q

11

98

6 -

Q1

19

87

- Q

11

98

8 -

Q1

19

89

- Q

11

99

0 -

Q1

19

91

- Q

11

99

2 -

Q1

19

93

- Q

11

99

4 -

Q1

19

95

- Q

11

99

6 -

Q1

19

97

- Q

11

99

8 -

Q1

19

99

- Q

12

00

0 -

Q1

20

01

- Q

12

00

2 -

Q1

20

03

- Q

12

00

4 -

Q1

20

05

- Q

12

00

6 -

Q1

20

07

- Q

12

00

8 -

Q1

20

09

- Q

12

01

0 -

Q1

20

11

- Q

12

01

2 -

Q1

20

13

- Q

12

01

4 -

Q1

In thousands

Homeownership Rate

60

61

62

63

64

65

66

67

68

69

70

19

90

- Q

1

19

91

- Q

1

19

92

- Q

1

19

93

- Q

1

19

94

- Q

1

19

95

- Q

1

19

96

- Q

1

19

97

- Q

1

19

98

- Q

1

19

99

- Q

1

20

00

- Q

1

20

01

- Q

1

20

02

- Q

1

20

03

- Q

1

20

04

- Q

1

20

05

- Q

1

20

06

- Q

1

20

07

- Q

1

20

08

- Q

1

20

09

- Q

1

20

10

- Q

1

20

11

- Q

1

20

12

- Q

1

20

13

- Q

1

20

14

- Q

1

Household Net Worth($5,500 vs. $195,500)

$0

$50,000

$100,000

$150,000

$200,000

$250,000

Renter Homeowner

1998 2001 2004 2007 2010 2013

x31 x46x36 x34x46

Homeowner net worth ranges from 31 to 46 times that of renters x36

Source: Federal Reserve Survey of Consumer Finances

Home Price Index

0

100

200

300

400

500

600

19

80

- Q

1

19

81

- Q

3

19

83

- Q

1

19

84

- Q

3

19

86

- Q

1

19

87

- Q

3

19

89

- Q

1

19

90

- Q

3

19

92

- Q

1

19

93

- Q

3

19

95

- Q

1

19

96

- Q

3

19

98

- Q

1

19

99

- Q

3

20

01

- Q

1

20

02

- Q

3

20

04

- Q

1

20

05

- Q

3

20

07

- Q

1

20

08

- Q

3

20

10

- Q

1

20

11

- Q

3

20

13

- Q

1

20

14

- Q

3

Alaska Washington Oregon Idaho Montana

The Reason for Not Feeling It

• Very Slow Housing Market Recovery

• Very Slow Commercial Market Recovery

• Holds Back Economic Recovery

Two and Out?Or Multi-year Expansion?

(Single-Family Existing Home Sales Only)

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,0001

96

8

19

70

19

72

19

74

19

76

19

78

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

Housing Starts Rising … Too Slowly

0

500

1000

1500

2000

2500

30001

97

0 -

Jan

19

72

- J

an

19

74

- J

an

19

76

- J

an

19

78

- J

an

19

80

- J

an

19

82

- J

an

19

84

- J

an

19

86

- J

an

19

88

- J

an

19

90

- J

an

19

92

- J

an

19

94

- J

an

19

96

- J

an

19

98

- J

an

20

00

- J

an

20

02

- J

an

20

04

- J

an

20

06

- J

an

20

08

- J

an

20

10

- J

an

20

12

- J

an

20

14

- J

an

Thousand units

Time to Sell a New Spec Home(in months)

0

2

4

6

8

10

12

14

16

2000- Jan

2001- Jan

2002- Jan

2003- Jan

2004- Jan

2005- Jan

2006- Jan

2007- Jan

2008- Jan

2009- Jan

2010- Jan

2011- Jan

2012- Jan

2013- Jan

2014- Jan

Sluggish Recovery in Housing Starts

• Cost of Construction Rising Faster than CPI

• Labor Shortage for construction work

• Construction loan difficulty for small local homebuilders … Dodd-Frank financial regulations?

Pent Up Demand

2000 2014

Existing Home Sales 5.2 m 4.9 m

New Home Sales 880 K 440 K

Mortgage Rates 8.0% 4.2%

Payroll Jobs 132.0 m 138.9 m

Population 282 m 319 m

37 million more people living in the country

Multiyear Recovery Likely

• More Jobs

• Manageable Mortgage Rates

• Population Pent-Up Demand

• More Inventory

• Record High Household Wealth

Jobs in Alaska

200

220

240

260

280

300

320

340

360

20

00

- J

an2

00

0 -

Ju

l2

00

1 -

Jan

20

01

- J

ul

20

02

- J

an2

00

2 -

Ju

l2

00

3 -

Jan

20

03

- J

ul

20

04

- J

an2

00

4 -

Ju

l2

00

5 -

Jan

20

05

- J

ul

20

06

- J

an2

00

6 -

Ju

l2

00

7 -

Jan

20

07

- J

ul

20

08

- J

an2

00

8 -

Ju

l2

00

9 -

Jan

20

09

- J

ul

20

10

- J

an2

01

0 -

Ju

l2

01

1 -

Jan

20

11

- J

ul

20

12

- J

an2

01

2 -

Ju

l2

01

3 -

Jan

20

13

- J

ul

20

14

- J

an2

01

4 -

Ju

l

In thousands

Jobs in Washington

2400

2500

2600

2700

2800

2900

3000

3100

3200

20

00

- J

an2

00

0 -

Ju

l2

00

1 -

Jan

20

01

- J

ul

20

02

- J

an2

00

2 -

Ju

l2

00

3 -

Jan

20

03

- J

ul

20

04

- J

an2

00

4 -

Ju

l2

00

5 -

Jan

20

05

- J

ul

20

06

- J

an2

00

6 -

Ju

l2

00

7 -

Jan

20

07

- J

ul

20

08

- J

an2

00

8 -

Ju

l2

00

9 -

Jan

20

09

- J

ul

20

10

- J

an2

01

0 -

Ju

l2

01

1 -

Jan

20

11

- J

ul

20

12

- J

an2

01

2 -

Ju

l2

01

3 -

Jan

20

13

- J

ul

20

14

- J

an2

01

4 -

Ju

l

In thousands

Jobs in Oregon

1500

1550

1600

1650

1700

1750

1800

20

00

- J

an2

00

0 -

Ju

l2

00

1 -

Jan

20

01

- J

ul

20

02

- J

an2

00

2 -

Ju

l2

00

3 -

Jan

20

03

- J

ul

20

04

- J

an2

00

4 -

Ju

l2

00

5 -

Jan

20

05

- J

ul

20

06

- J

an2

00

6 -

Ju

l2

00

7 -

Jan

20

07

- J

ul

20

08

- J

an2

00

8 -

Ju

l2

00

9 -

Jan

20

09

- J

ul

20

10

- J

an2

01

0 -

Ju

l2

01

1 -

Jan

20

11

- J

ul

20

12

- J

an2

01

2 -

Ju

l2

01

3 -

Jan

20

13

- J

ul

20

14

- J

an2

01

4 -

Ju

l

In thousands

Jobs in Idaho

500

520

540

560

580

600

620

640

660

680

20

00

- J

an2

00

0 -

Ju

l2

00

1 -

Jan

20

01

- J

ul

20

02

- J

an2

00

2 -

Ju

l2

00

3 -

Jan

20

03

- J

ul

20

04

- J

an2

00

4 -

Ju

l2

00

5 -

Jan

20

05

- J

ul

20

06

- J

an2

00

6 -

Ju

l2

00

7 -

Jan

20

07

- J

ul

20

08

- J

an2

00

8 -

Ju

l2

00

9 -

Jan

20

09

- J

ul

20

10

- J

an2

01

0 -

Ju

l2

01

1 -

Jan

20

11

- J

ul

20

12

- J

an2

01

2 -

Ju

l2

01

3 -

Jan

20

13

- J

ul

20

14

- J

an2

01

4 -

Ju

l

In thousands

Jobs in Montana

300

320

340

360

380

400

420

440

460

480

20

00

- J

an2

00

0 -

Ju

l2

00

1 -

Jan

20

01

- J

ul

20

02

- J

an2

00

2 -

Ju

l2

00

3 -

Jan

20

03

- J

ul

20

04

- J

an2

00

4 -

Ju

l2

00

5 -

Jan

20

05

- J

ul

20

06

- J

an2

00

6 -

Ju

l2

00

7 -

Jan

20

07

- J

ul

20

08

- J

an2

00

8 -

Ju

l2

00

9 -

Jan

20

09

- J

ul

20

10

- J

an2

01

0 -

Ju

l2

01

1 -

Jan

20

11

- J

ul

20

12

- J

an2

01

2 -

Ju

l2

01

3 -

Jan

20

13

- J

ul

20

14

- J

an2

01

4 -

Ju

l

In thousands


• More Jobs



• More Inventory


Monetary Policy by Federal Reserve (zero rate policy for 6 years!)

0

1

2

3

4

5

6

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Fed Funds%

Federal Reserve Balance Sheet from Quantitative Easing

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

4000000

20

05

- J

an

20

05

- J

un

20

05

- N

ov

20

06

- A

pr

20

06

- S

ep

20

07

- F

eb

20

07

- J

ul

20

07

- D

ec

20

08

- M

ay

20

08

- O

ct

20

09

- M

ar

20

09

- A

ug

20

10

- J

an

20

10

- J

un

20

10

- N

ov

20

11

- A

pr

20

11

- S

ep

20

12

- F

eb

20

12

- J

ul

20

12

- D

ec

20

13

- M

ay

Total Asset Purchase

$ million

30-year Mortgage Rates

0

1

2

3

4

5

6

7

8

9

Non-worrisome CPI Inflation – YetCOLA of 1.7% in 2015

-3

-2

-1

0

1

2

3

4

5

6

20

00

- J

an

20

00

- A

ug

20

01

- M

ar

20

01

- O

ct

20

02

- M

ay

20

02

- D

ec

20

03

- J

ul

20

04

- F

eb

20

04

- S

ep

20

05

- A

pr

20

05

- N

ov

20

06

- J

un

20

07

- J

an

20

07

- A

ug

20

08

- M

ar

20

08

- O

ct

20

09

- M

ay

20

09

- D

ec

20

10

- J

ul

20

11

- F

eb

20

11

- S

ep

20

12

- A

pr

20

12

- N

ov

20

13

- J

un

20

14

- J

an

20

14

- A

ug

Rising Renters’ and Homeowners’ Rent Growth (Above 3%)

-1

0

1

2

3

4

5

20

03

- J

an

20

03

- J

ul

20

04

- J

an

20

04

- J

ul

20

05

- J

an

20

05

- J

ul

20

06

- J

an

20

06

- J

ul

20

07

- J

an

20

07

- J

ul

20

08

- J

an

20

08

- J

ul

20

09

- J

an

20

09

- J

ul

20

10

- J

an

20

10

- J

ul

20

11

- J

an

20

11

- J

ul

20

12

- J

an

20

12

- J

ul

20

13

- J

an

20

13

- J

ul

20

14

- J

an

20

14

- J

ul

Owners' Equivalent Rent Renters' Rent

Oil Price

0

20

40

60

80

100

120

140

160

20

00

- J

an

20

00

- A

ug

20

01

- M

ar

20

01

- O

ct

20

02

- M

ay

20

02

- D

ec

20

03

- J

ul

20

04

- F

eb

20

04

- S

ep

20

05

- A

pr

20

05

- N

ov

20

06

- J

un

20

07

- J

an

20

07

- A

ug

20

08

- M

ar

20

08

- O

ct

20

09

- M

ay

20

09

- D

ec

20

10

- J

ul

20

11

- F

eb

20

11

- S

ep

20

12

- A

pr

20

12

- N

ov

20

13

- J

un

20

14

- J

an

20

14

- A

ug

Supply and Demand: Oil in U.S.

19

21

5

9

Monetary Policy

• Quantitative Easing … Finished

• Fed Funds Rate … hike in mid-2015

• Earlier Move to Tighten because of Inflation Pressure

• Long-term Steady State Rate (2016 onwards) .. 10 year Treasury at 5.0%

• Mortgage Rates reaching 6% by 2016

Erratic Credit Availability

• FICO New Method

• Mel Watt – New overseer of Fannie/Freddie

– Lower down payment products

• Ridiculous FHA premiums … should decline

• Historic low mortgage default rates on recent vintages (2010-2014)


• More Jobs



• More Inventory


U.S. Population

0

50

100

150

200

250

300

350

1968 1973 1978 1983 1988 1993 1998 2003 2008 2013

In millions


• More Jobs



• More Inventory and Moderate Price Growth


Low Inventory of Homes for Sale

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,0002

00

7 -

Jan

20

07

- M

ay2

00

7 -

Sep

20

08

- J

an2

00

8 -

May

20

08

- S

ep2

00

9 -

Jan

20

09

- M

ay2

00

9 -

Sep

20

10

- J

an2

01

0 -

May

20

10

- S

ep2

01

1 -

Jan

20

11

- M

ay2

01

1 -

Sep

20

12

- J

an2

01

2 -

May

20

12

- S

ep2

01

3 -

Jan

20

13

- M

ay2

01

3 -

Sep

20

14

- J

an2

01

4 -

May

20

14

- S

ep2

01

5 -

Jan

Shadow Inventory(% of mortgage in foreclosure process or seriously delinquent)

0

1

2

3

4

5

6

7

8

20

00

- Q

1

20

00

- Q

4

20

01

- Q

3

20

02

- Q

2

20

03

- Q

1

20

03

- Q

4

20

04

- Q

3

20

05

- Q

2

20

06

- Q

1

20

06

- Q

4

20

07

- Q

3

20

08

- Q

2

20

09

- Q

1

20

09

- Q

4

20

10

- Q

3

20

11

- Q

2

20

12

- Q

1

20

12

- Q

4

20

13

- Q

3

20

14

- Q

2

AK WA OR ID MT

Alaska Housing Permits (year-to-date)

0

500

1000

1500

2000

2500

3000

3500

4000

2000- Jan

2001- Jan

2002- Jan

2003- Jan

2004- Jan

2005- Jan

2006- Jan

2007- Jan

2008- Jan

2009- Jan

2010- Jan

2011- Jan

2012- Jan

2013- Jan

2014- Jan

Washington Housing Permits (year-to-date)

0

10000

20000

30000

40000

50000

60000

2000- Jan

2001- Jan

2002- Jan

2003- Jan

2004- Jan

2005- Jan

2006- Jan

2007- Jan

2008- Jan

2009- Jan

2010- Jan

2011- Jan

2012- Jan

2013- Jan

2014- Jan

Oregon Housing Permits (year-to-date)

0

5000

10000

15000

20000

25000

30000

35000

2000- Jan

2001- Jan

2002- Jan

2003- Jan

2004- Jan

2005- Jan

2006- Jan

2007- Jan

2008- Jan

2009- Jan

2010- Jan

2011- Jan

2012- Jan

2013- Jan

2014- Jan

Idaho Housing Permits (year-to-date)

0

5000

10000

15000

20000

25000

2000 - Jan2001 - Jan2002 - Jan2003 - Jan2004 - Jan2005 - Jan2006 - Jan2007 - Jan2008 - Jan2009 - Jan2010 - Jan2011 - Jan2012 - Jan2013 - Jan2014 - Jan2015 - Jan

Montana Housing Permits (year-to-date)

0

1000

2000

3000

4000

5000

6000

2000- Jan

2001- Jan

2002- Jan

2003- Jan

2004- Jan

2005- Jan

2006- Jan

2007- Jan

2008- Jan

2009- Jan

2010- Jan

2011- Jan

2012- Jan

2013- Jan

2014- Jan


• More Jobs



• More Inventory and Moderate Price Growth


Vacation Home Sales

-

200

400

600

800

1,000

1,200

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

In thousands

Economic Forecast

2013 2014Likely

2015Forecast

2016 Forecast

GDP Growth 2.2% 2.6% 3.1% 3.0%

Job Growth +2.3 million +3.0 million +2.5 million +2.7 million

CPI Inflation 1.5% 1.2% 2.0% 3.2%

Consumer Confidence

73 87 95 98

10-yearTreasury

2.5% 2.5% 2.9% 4.2%

Housing Forecast

2013 2014Likely

2015Forecast

2016 Forecast

Housing Starts 925,000 990,000 1.2 million 1.4 million

New Home Sales

430,000 440,000 600,000 720,000

Existing Home Sales

5.1 million 4.9 million 5.3 million 5.4 million

Median Price Growth

+ 11.5% + 5.3% + 4% + 4%

30-year Rate 4.0% 4.2% 4.8% 5.8%

Underwriting Standards

Strict Strict Transition Normal

Commercial Investment Sales of Large Properties(Properties valued at $2.5 million and over)

130

212

362

423

571

174

67

147

233

299

355400 420 430

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Commercial Sales in $Billions

REALTOR® Markets & Deal Size(Not $2.5 million Properties)

21%

22%

26%

17%

12%

1%

2%

< $250,000

$250,000 - $500,000

$500,000 - $1,000,000

$1,000,000 - $2,000,000

$2,000,000 - $5,000,000

$5,000,000 - $10,000,000

> $10,000,000

2013 CRE Lending Survey: Value of most recent sales transaction

Source: NAR

8%

17%

25%

7%

6%

4%

18%

1% 11%

3%

Current sources of financing for commercial deals

National banks (“Big four”)

Regional banks

Local banks

Credit unions

Life insurance companies

REITs

Private investors

Public companies

Small Business Administration

Other, please specify

Source: NAR

Small Banks Important to REALTORS®

REALTORS® Report Commercial Sales Increase

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

Pe

rce

nt C

ha

ng

e, y

ea

r-o

ver-

yea

r

Sales Volume

Sales Volume

Source: National Association of Realtors®

New Construction and Leasing Favorable

OFFICE 2014 2015 2016

Vacancy Rate 16.2% 15.8% 15.6%

Net Absorption ('000 sq. ft.) 36,192 50,678 57,782

Completions ('000 sq. ft.) 26,450 41,799 44,862

Rent Growth 2.6% 3.2% 3.6%

INDUSTRIAL 2014 2015 2016

Vacancy Rate 8.9% 8.5% 8.1%



Inventory ('000,000 sq. ft.) 8,468 8,537 8,598

Rent Growth 2.4% 2.8% 2.9%

RETAIL 2014 2015 2016




Rent Growth 2.0% 2.4% 3.0%

MULTI-FAMILY 2014 2015 2016


Net Absorption (Units) 223,421 170,065 140,128

Completions (Units) 191,481 146,461 122,381

Rent Growth 4.0% 3.9% 3.5%

Sources: National Association of REALTORS® / Reis, Inc.

Commercial Real Estate Forecast

Commercial Market Forecast over the next 2 years

• Rising interest rates …

• Cap rates rise somewhat (narrow the gap first)

• Increased occupancy and falling vacancy (new supply lacking)

• Rising rents … can offset rising rates to support property values

• Overall … improving business opportunities

Real Estate Trends and Outlook - Montana Association of ... · Real Estate Trends and Outlook ......

Documents

Transcript of Real Estate Trends and Outlook - Montana Association of ... · Real Estate Trends and Outlook ......