Soaring confidence further elevates consumption. Strong consumer spending continued in August, boosting core retail sales 5.9 percent on an annual basis and surpassing the precious four-month average of 5.8 percent. A healthy job market and steadily rising wages remain key drivers of consumer confidence, pushing it to its highest level this cycle. With optimism climbing, consumers are making more discretionary purchases, benefiting retailers of electronics and appliances as the sector recorded 4.1 percent annual growth.… Read More

Monthly housing payments surged this year for homebuyers as mortgage rate increases and rising home prices lifted the cost of homeownership. The monthly payment on a median-priced home now stands $130 higher than at the beginning of the year, driven by a 70-basis-point interest rate increase. Fixed-rate mortgages now average about 4.5 percent, their highest level since 2011, and this has increased the gap between the monthly mortgage payment on a median-price home and the… Read More

Economy gets a boost from tax reform. Economic growth surpassed 4 percent in the second quarter, lifted by strengthened consumption and business investment. The new tax law has stimulated the economy by increasing after-tax earnings and pushing consumer and business confidence to near-record levels. This combination has sparked elevated spending and accelerated job creation. Through the first half of 2018, the economy added over 1.3 million jobs, driving unemployment below 4 percent and boosting wage… Read More

Low unemployment and consistent job growth are boosting apartment demand. A broad base of high-wage industries and more than 8.5 million residents are driving significant net absorption of apartments, particularly as single-family homes remain out of reach for many would-be buyers. As the pace of construction soared, net absorption outpaced new supply every year since 2012, fostering a metrowide vacancy rate that reached 2 percent by the end of 2017. This year, development with contract… Read More

Retail sales accelerate as unemployment rate tumbles.  Retail spending posted another strong month with help from an incredibly tight labor market.  The 3.8 percent unemployment rate has placed upward pressure on wages as many companies compete for quality employees.  This trend has supposed modest but steady wage growth, driving the annual pace of the wage gains to 2.7 percent in May this year, in turn supporting a 5.1 percent increase in core retail sales.  With… Read More

The Federal Reserve increased the federal funds rate by 25 basis points, lifting the overnight lending rate to a range of 1.75 percent to 2 percent.  Citing stronger consumer spending, and a highly optimistic business community, the Fed laid out the potential for two additional rate hikes in 2018.  The Fed noted strong job growth, accommodative fiscal policy and above-target inflation as reasons for continuing to normalize monetary policy over the coming months.

Labor market enters a new paradigm.  For the first time on record, the number of job openings exceeds the number of people out of work and seeking employment.  At the end of April, job openings stood at 6.7 million while the number of unemployment sat at 6.3 million.  But despite this abnormal condition, employers and the economy have found ways to keep employment expanding at a quickened stride.

For a fifth consecutive year, millennials led home purchase activity, comprising 36 percent of the buyers in 2017.  The oldest millennials are now 37, and as this generation ages and starts families, a wave of potential new buyers are moving into the market.  Approximately two-thirds of first-time buyers in 2017 were millennials, but housing affordability remains a concern in 2018 as home listings under $200,000 continue to shrink.  Homes in this price tranche have fallen… Read More

Year-to-date employment growth signals economic acceleration.  Employment additions in the first four months of 2018 outpaced the previous two years over the same time frame, with 799,000 jobs added.  The quickened pace of job growth should accelerate commercial real estate demand across all sector, as companies expand payrolls and operations. Increased employment setting stage for escalating apartment demand.  The number of workers unemployed or working part-time involuntarily moved to the lowest level in the expansion,… Read More

Rising interest rates spark fear from investors but reflect persistently strong economic growth that underpins commercial real estate performance.  The 10-year Treasury rate inched past 3 percent for the first time since late 2013 following the “taper tantrum.”  Though many investors fear the rising rates will erode their investment yields, they must consider the strength and durability of the current economic cycle and how it will continue to support commercial real estate performance.