WASHINGTON — The real estate market is projected to continue expanding at healthy and fairly steady levels for 2015 through 2017, according to a three-year economic forecast from the Urban Land Institute (ULI) Center for Capital Markets and Real Estate. The latest ULI Real Estate Consensus Forecast, a semi-annual outlook, is based on a survey of 49 of the industry’s top economists and analysts representing 36 of the country’s leading real estate investment, advisory, and research firms and organizations.
Compared to the previous forecast conducted in April 2015, the new Consensus Forecast is slightly less bullish in its outlook; however, it predicts three more years of favorable real estate conditions.
“The latest Consensus Forecast has picked up on recent growth concerns and stock market corrections around the world,” said ULI leader and survey participant William Maher, director of North American strategy for LaSalle Investment Management in Baltimore. “The U.S. economy and real estate markets are in much better shape than most other countries, but global economies and capital markets are increasingly inter-related. Still, the vast majority of indicators in the forecast indicate favorable economic and capital markets in the U.S. as well as moderately strong real estate fundamentals and investment returns.”
The Consensus Forecast predicts that single-family housing starts will increase to 745,000 in 2015, 842,000 in 2016, and 900,000 in 2017, yet still remain below the 20-year average. Home price increases are expected to moderate to 5 percent in 2015, 4.3 percent in 2016, and 3.9 percent in 2017. Compared to six months ago, forecasts for housing starts in 2015 and 2016 are more optimistic, while the forecast for 2017 remains unchanged.
Regarding real estate capital markets, commercial real estate transaction volume is expected to remain stable at around $500 billion in all three forecast years. Issuance of commercial mortgage-backed securities (CMBS) is expected to continue to grow steadily through 2017 with projected increases to $110 billion in 2015, $130 billion in 2016, and $140 billion in 2017.
Publication date: 11/16/2015