Clouds May Lift for Housing, Economy by 2014: Survey

Housing lingered in the doldrums of a recovery last year but may pick up by 2014 as the U.S. economy generally improves, analysts and economists said Wednesday.

[IMAGE]

The ""Urban Land Institute"":http://www.uli.org/ polled 38 real estate analysts and economists to signal their expectations for ""broad improvements"" in the nation's economy and real estate markets in 2012.

The findings?

Commercial property transaction volume may get a 50-percent bump, with increases in the issuance of commercial mortgage-backed securities by as much as half and a drive in returns for real estate assets and investment trusts by anywhere from 8.5 percent to 11 percent year-over-year.

""Commercial real estate returns for institutional quality and REIT assets have performed very well in recent years, and this performance is expected to remain strong but trend lower over the next three years,"" ""Dean Schwanke"":https://netforum.uli.org/iWeb/images/ULIEvents/81561108/Dean_Schwanke_Bio.pdf, executive director of the ULI Center for Capital Markets and Real Estate, said in a statement.

The survey revealed that transaction volume in commercial real estate markets could reach as

[COLUMN_BREAK]

much as $312 billion in 2014, up from a projected $250 billion in 2012.

The issuance of commercial mortgage-backed securities could step up to $75 billion from $40 billion over the same two-year timeframe.

Analysts said that housing starts could double by 2014, just as home prices tick up in 2013 and prices increase overall by 3.5 percent that year.

Total returns for Real Estate Investment Trusts could meanwhile decline to 8.5 percent in 2014, reflecting a series of dips along the way at 9 percent in 2013 and 10 percent in 2012.

The group found that housing could thrive on the back of a return by the economy at large, with market analysts suggesting that GDP could rise from 2.5 percent this year to 3 percent next year and 3.2 percent in 2014.

Unemployment may also linger around 8 percent this year, with expectations that it will fall to 7.5 percent in 2013 and 6.9 percent in 2014.

Economists said the job outlook may also improve as debt crises draw down overseas, with payrolls expected to swell to 2 million this year, 2.5 million next year, and 2.75 million in 2014.

""While geopolitical and global economic events could change the forecast going forward, what we see in this survey is confidence that the U.S. real estate economy has weathered the brunt of the recent financial storm and is poised for significant improvement over the next three years,"" ""Patrick Phillips"":http://www.uli.org/LearnAboutULI/WhoWeAre/FromthePresidents/PatrickPhillips.aspx, CEO of the group, said in the statement. ""These results hold much promise for the real estate industry.""

The news is welcome for an industry that suffered during the financial crisis and lingered in still-nascent recovery as home prices fell to their lowest levels in years, more community banks went under than at any time since the Great Depression, and GDP contracted significantly.