After falling to a five-decade low in the second quarter of last year, the homeownership rate is up almost a full percentage point to 63.7 percent in June.  The increase was driven by a rise in homeownership among millennials, among which the rate advanced 120 basis points year over year to 35.3 percent.  Though rising, the rate re-mains below the peak of 43.6 percent achieved in mid-2004.

Following the rounds of quantitative easing that pushed the Federal Reserve’s balance sheet to $4.5 trillion, the Federal Reserve has outlined plans to reduce the size of its holdings.  This will accelerate its effort to move toward more normalized monetary policy following nearly a decade of easing.  Although the Federal Reserve has raised short-term interest rates four times since the financial crisis took them to zero, the balance sheet has remained consistently near $4.5 trillion… Read More

The commercial real estate market may face gradual softening with signs that investors are proceeding more cautiously on new investment.

Accelerating job creation together with record-high employment openings have boosted confidence among younger workers, convincing many that now is the time to move out on their own.  These newly formed households are facing a tight housing market as apartment vacancy is below 4 perfect and single-family housing inventory to purchase sits near an all-time low.

Job creation and household formation underpin apartment demand.  Boasting a diverse range of industries and professions, New York City establishments remain steady job creators, even as the pace of employment growth has moderated in recent years.  Meanwhile, extensive development pipeline dominated by Brooklyn, Manhattan and Queens.  With more than 35,000 units slated for delivery in 2017, builders remain highly active in the metro.

As unemployment reaches a 16-year low, job creation is restrained.  This tight labor market offers a mixed outlook for commercial real estate.

New-home sales are building momentum as entry-level buyers re-engage in homebuying.

The homeownership rate is at a 12-year low due to young households favoring apartments.

Fed rate increase following March’s meeting signals confidence in the economy yet reinforces investor caution and the slowing of investment real estate transaction activity.

Apartment investments remain well positioned entering 2017, though several important macro-level dynamics have begun to shift course.  The November election set in motion a range of fiscal, monetary, regulatory and economic changes that will merit close investor attention.  Prospective modifications to tax laws, a rising interest rate environment and upward revisions to economic forecasts could all influence investor behavior, while rising apartment completions will also generate a dynamic landscape.  While the outlook points to another… Read More