Monthly Archives: April 2012

GDP Growth | Bedford Hills NY Real Estate

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In each Economic Update, the Research staff analyzes recently released economic indicators and addresses what these indicators mean for REALTORS® and their clients. Today’s update discusses GDP growth.

  • The economy hit a soft patch in the latest report with GDP growing by only 2.2 percent on an annualized basis.  This all-encompassing measure on everyone’s income all combined needs to grow by at least 3 percent to assure consistent solid growth in jobs.
  • Even though expansion momentum slowed, the economy is in no danger of falling into a recession with people losing jobs on net because the positives clearly outweigh the negatives at the moment.   Consumers have slowly opened their wallets, and consumer spending rose 2.9 percent.  Companies held back spending in the first quarter, but this is likely to be temporary given that corporate cash reserves are sky-high.  And, more importantly, the recovering housing market will add meaningfully to GDP growth this year for the first time in 6 years.
  • On the negative side, military spending cuts led to an overall lower decline in federal government spending.  Spending cuts at state and local governments also forced GDP down.
  • GDP growth rates in the upcoming quarters are expected to be about the same: sluggish to moderate, and neither robust nor contracting.  At this speed, the unemployment rate will likely go down to around 7.8% by the end of the year.

via economistsoutlook.blogs.realtor.org

Speed Bumps Ahead | Chappaqua Real Estate

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Mirroring the uneven economic recovery, the housing market is expected to move in a slow, gradual upward path in 2012, while encountering its share of speed bumps along the road, according to economists participating in yesterday’s National Association of Home Builders (NAHB) construction forecast webinar on the housing and economic outlook.

While the latest monthly housing data have shown signs of a slight softening, NAHB Chief Economist David Crowe said this is more reflective of typical month-to-month volatility in the numbers and unusual seasonal factors than they are an indication of any significant downward trend in the broader housing market.

“The aggregate information suggests we’re just in a pause mode right now in terms of these measures,” said Crowe, who noted this could partly be the result of an early spring that brought much better weather than usual into the picture at the start of this year and pulled some housing activity forward.

Pointing out that less volatile quarterly data have continued to show modest improvement in key housing indicators such as builder sentiment, new-home sales and housing production, Crowe said the “housing outlook continues to slowly brighten.”

Crowe noted that numerous other fundamentals remain positive for housing at this time, including demographic factors (with pent-up household demand expected to ramp up and echo-boomers heading into their prime household formation ages), historically favorable mortgage rates that are not expected to move higher than 5 percent by the end of next year, more than 100 local markets currently listed on the NAHB/First American Improving Markets Index, and the fact that house price-to-income ratio has now returned to its historical average of about three-to-one versus the nearly five-to-one to which it had previously risen during the height of the housing boom.

However, he cautioned that housing still continues to face formidable challenges of its own – such as rising foreclosures, persistently tight lending standards for home buyers and builders and difficulties in obtaining accurate appraisals. Moreover, disappointing job growth numbers in March and uncertainty in the European economy are undermining prospects for a vigorous recovery.

“No one is anticipating that an upward path for housing will run in a straight-line trajectory,” said Crowe. “The economy is in an uneven recovery and we can expect some corresponding ups-and-downs in the housing market in the months ahead. However, NAHB believes that on the whole, we can expect a slow and gradual recovery in housing starts, home sales and the overall housing market in 2012.”

via realestateeconomywatch.com

Investors Limit Multifamily Boom | Armonk NY Real Estate

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Though optimism is spurring new multifamily construction, access to capital is handcuffing new construction, especially in secondary and tertiary markets

Only 17 percent of multifamily firms reported that capital is available for all property types in all markets. By contrast, 36 percent said it is constrained in secondary and tertiary markets and 34 percent said it is constrained for all properties other than top-tier ones – even in primary markets according to the Quarterly Survey of Apartment Market Conditions by the Multifamily Housing Council.

The MHC’s Debt Financing Index declined to 65 from 74. As the only index that dropped below 50 in the past nine quarters (48 in Q4 2010), borrowing conditions continued to improve for the industry. Just four percent believed conditions worsened from last quarter, compared to 34 percent who reported improving conditions.

The Equity Financing Index grew slightly to 62 from 60. One third of respondents reported quarter-to-quarter equity financing as more available, compared to nine percent reporting less availability.

The Market Tightness Index increased to 74 from 60. Nearly half (49 percent) reported tighter markets – reflecting lower vacancy rates and/or higher rents – compared to only one percent reporting looser markets.

“The strength of the sector’s recovery has attracted capital to the industry,” said said NMHC Chief Economist Mark Obrinsky. “But our latest survey finds that capital is largely targeted at top-tier properties in core markets and not widely available throughout the U.S. Fully 79 percent of respondents said capital was constrained either by property type, by market or both.”

via realestateeconomywatch.com