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Real Estate Experts Mixed on Market Future

December 30, 2013

Real Estate professionals are practicing cautious optimism about the housing market in 2014.

Cautious optimism is the attitude real estate executives are taking toward today’s markets.

 A recent Forbes article, citing a study conducted by CIT Group Inc., argues that while today’s real estate execs aren’t quite ecstatic about the economy, they tend to think the market is showing positive signs.

“Commercial real estate has been known to be a bellwether for the overall U.S. economy…  As we enter 2014, we are seeing mixed views among middle market commercial real estate executives. The good news is we are definitely seeing renewed optimism and expectations for a more complete recovery down the road.” Matt Galligan, President of CIT Real Estate Finance, told reporters at Forbes.

According to the author, the study shows that commercial real estate markets are undergoing a slow and cautious recovery, with only 10% of executives saying they believe the recovery to be strong, and nearly a third warning that specific sections of the industry have yet to see the worst of their decline.

Forbes also writes that despite the uncertainty in the markets, investors are taking advantage of long term opportunities.  Sixty percent of professionals told CIT that their current investment plans are opportunistic, and face a balance of challenges and opportunities, and more than 1 in 10 are operating on an aggressive investment strategy.

One major concern among executives is taxes.  According to the article, three in five real estate professionals are worried that pending taxes, specifically from the Affordable Care Act, will slow the already precarious growth in their industry.  Among other concerns are interest rates, unemployment numbers, consumer confidence, and foreclosures.

In terms of available financing, industry experts are split on their opinions.  Nearly two thirds of executives say they have adequate funding for operations, the author writes, but 33% report that capital is difficult to come by.  Only about half of investors said they would be pursuing bank loans for operations in the next 12 months.

So what does this report tell us?  It tells us that the market is still on uncertain ground, but that a recovery is underway… and it will be interesting to see how these numbers change in the new year.


From → Gary Richetelli

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