Archives for December 2020

Key Highlights

More than 20 leading economic and housing experts predict GDP growth of 3.5% and an annual unemployment rate of 6.2% in 2021.
Housing prices are expected to climb 8.0% next year and 5.5% in 2022, with 30-year fixed mortgage rates of 3.0% and 3.25% for 2021 and 2022, respectively.
Dallas-Fort Worth, Atlanta, Phoenix, Indianapolis and Provo-Orem join five other metropolitan areas among NAR’s top 10 real estate markets during and in a post-COVID-19 environment.

WASHINGTON (December 10, 2020) – Expect the post-pandemic economic rebound, improving job conditions and stable interest rates to continue in 2021, according to a survey of more than 20 top U.S. economic and housing experts. Lawrence Yun, NAR chief economist and senior vice president of research, unveiled the consensus forecast today during NAR’s second annual Real Estate Forecast Summit.
The group of experts predicted:

Gross Domestic Product growth of 3.5% in 2021 and 3.0% in 2022;
An annual unemployment rate of 6.2% next year with a decline to 5.0% in 2022;
Average annual 30-year fixed mortgage rates of 3.0% and 3.25% for 2021 and 2022, respectively;
Annual median home prices to increase by 8.0% in 2021 and by 5.5% in 2022;
Housing starts of 1.50 million next year and 1.59 million in 2022;
The share of the U.S. workforce working from home to be 18% in 2021 – down from 21% in 2020 – and 12% in 2022; and
Small declines in office and hotel vacancy rates in 2021, with a slight increase in retail vacancies next year.

When asked if the Federal Open Market Committee will change the federal funds rate in 2021, 90% of the experts surveyed said they expect no change in the current rate of 0%. For 2022, the experts predict a rate increase of 0.25%.
“It is an understatement to say the year 2020 has been filled with challenges and full of surprises,” said Yun. “Yet, one astonishing development has been the hot housing market as consumers eyed record-low mortgage rates and reconsidered what a home should be in a new economy with flexible work-from-home schedules.”
In 2020, home sales will reach 5.52 million, the highest annual mark since 2006, with the median home price setting a record high of $293,000, according to NAR.

Top 10 Real Estate Markets During and in a Post-COVID-19 Environment

NAR identified 10 markets that have shown resilience during this pandemic period and are expected to perform well in a post-COVID-19 environment in the next two years. In alphabetical order, the markets are:

Atlanta-Sandy Springs-Alpharetta, Georgia
Boise City, Idaho
Charleston-North Charleston, South Carolina
Dallas-Fort Worth-Arlington, Texas
Des Moines-West Des Moines, Iowa
Indianapolis-Carmel-Anderson, Indiana
Madison, Wisconsin
Phoenix-Mesa-Chandler, Arizona
Provo-Orem, Utah
Spokane-Spokane Valley, Washington

“Some markets have been performing exceptionally well throughout the pandemic and they’ll likely carry that momentum well into 2021 and beyond because of strong in-migration of new residents, faster local job market recoveries and environments conducive to work-from-home arrangements and other factors,” Yun said.
NAR identified the top 10 metro areas by considering a variety of indicators that it views to be influential to a metro area’s recovery and growth prospects in a post-pandemic environment over the next two years, including: unemployment rate; net domestic migration, including movers from expensive West Coast areas; share of workers in retail trade, leisure and hospitality industries; mobility to retail and leisure places; and the fraction of the workforce working from home, among others.
“As we look towards 2021 and beyond, expect these 10 markets to perform strongly with potential buyers finding conditions particularly favorable to purchase a home,” said NAR President Charlie Oppler, a Realtor® from Franklin Lakes, N.J., and the CEO of Prominent Properties Sotheby’s International Realty. “Overall, residential real estate will continue to be an important driver of our nation’s economic recovery and the activity in these markets will help lead the way.”
Low unemployment rates compared to the national average signaled strong employment environments for residents of these areas. At 4.2%, Provo-Orem boasts the lowest unemployment rate among those listed, followed by Madison at 4.3%, Charleston at 4.7% and Des Moines at 5%.
Areas that are already attractive destinations to purchase a home, especially among movers from more expensive West Coast cities, may attract more technology workers, many of whom are from organizations with very flexible, and in some cases permanent, work-from-home policies. Overall, the Phoenix metro area attracted the largest number of movers from West Coast metro areas, with Dallas ranking second. Atlanta had the highest share of workers working from home at 8.8%, compared to the national share of 5.6%. Spokane also had a high fraction of the workforce work from home at 7.2%.
To view NAR’s Top 10 Markets During and in a Post-COVID-19 Environment report, visit https://www.nar.realtor/reports/top-ten-markets-during-covid.
The 2020 NAR Real Estate Forecast Summit consensus forecasts are compiled as the median of the responses of 23 economic and housing market experts who participated during the 2019 and 2020 summits. The survey was conducted from November 19 through December 4, 2020.
To view the 2020 NAR Real Estate Forecast Summit consensus forecast report, visit https://www.nar.realtor/research-and-statistics/research-reports/2020-consensus-forecast.
The National Association of Realtors® is America’s largest trade association, representing more than 1.4 million members involved in all aspects of the residential and commercial real estate industries.

Source: “Top Economic and Housing Experts Predict Post-Pandemic Rebound With Continued Job Growth, Stable Interest Rates in 2021”

Rising Sublease Space Takes Greater Share of Total Office Inventory

December 10, 2020 by CARNM

In some markets sublease space more than doubled and ended Q3 above 700,000 square feet.

The US office market’s recovery from the pandemic is facing several challenges, starting with the uncertainty of when or whether employees will return to work. Another significant headwind will be the dramatic increase in sublease space that now sits on the market.
A new report from Cushman & Wakefield shows just how significant this increase has been: office sublease space increased by 52% in the US in the first three quarters of 2020 to reach around 95 million square feet.
In some markets sublease space more than doubled and ended Q3 above 700,000 square feet. Sublease space increased the most in San Francisco (+488%), Nashville (+211%), Seattle (+182%), Pittsburgh (+174%), Austin (+160%) and Kansas City (+136%).
Manhattan has the most sublease space of any market at 16.1 million square feet, which accounted for 4.0% of its office inventory. Silicon Valley and San Francisco each have more than 6.0 million square feet. Dallas and Chicago round out the top five with between 3.5 and 4.0 million square feet of sublease space. The average market has just under 1.3 million square feet of sublease space.
In 18 markets, San Francisco (7.4%), Fairfield County, CT (5.5%) and Austin (4.2%), the available sublease accounted for more than 2.0% of total office inventory. The US average was 1.8%.
Ten markets did see sublease shrink over Q3. The two most significant were Phoenix -0.8 million square feet and Houston -0.9 million square feet.
C&W also highlights a growing disinclination by tenants to take space in major downtown or CBD areas. It found that the share of sublease space in the US CBDs increased over the last three quarters by 41%. Year to date sublease space in CBD submarkets rose by 68%, while non-CBD markets increased by 44%. Given the fact that COVID-19 has limited the short-term benefits of dense, urban settings, C&W says this growth is not surprising.
To put all this into historical perspective, C&W notes that the US’ available sublease space remained well below its historical peak during the Dot Com High in 2002 at 124 million square feet. On the other hand, the current amount of sublease space on the market is 7.3% higher than at the height of the Great Recession.
C&W ends the report on a positive point, saying that leasing activity may increase as occupiers have more certainty about the future of the health situation. “Sublease space in markets that historically have had limited space and high costs may be attractive to expanding occupiers returning to the office if/when the pandemic begins to subside,” it said.
Indeed, class-A asking rents in CBD markers are down by 2.7%, while sublease space is currently leasing at an average 23.9% discount compared to direct lease space, per data from Colliers International. This is above historical discounts for sublease space.
Source: “Rising Sublease Space Takes Greater Share of Total Office Inventory“

The Intersection of Pro Sports and Real Estate

December 8, 2020 by CARNM

There’s a long history of both pro sports athletes and franchise owners investing heavily in commercial real estate.
Commercial real estate has a long track record—when managed well—of being a stable investment option that generates income, asset value appreciation and boasts inherent tax advantages. It’s also an industry that thrives on competition, with brokers and investors engaging in cutthroat bids to close nearly every investment sale or lease.
For those reasons, for decades we have seen heavy crossover between professional sports and the real estate sector. Successful athletes that earned millions from contracts and endorsement deals have often steered some of that capital to commercial real estate development and investment. Others have been drawn to the call of the commercial real estate playing field itself. They have retired grass-stained uniforms in favor of fresh-pressed suits and gotten into the brokerage game.
The relationship goes the other way as well. Some of the most successful real estate investors of all time have used their real estate winnings to buy sports franchises.
The following gallery documents the long history of the crossover between the commercial real estate and sports worlds. (If you think of any we’ve missed, don’t hesitate to let us know.)
START SLIDESHOW ›
Source: “The Intersection of Pro Sports and Real Estate“

Fraud Alert: Insurance Calls Not From NAR

December 8, 2020 by CARNM

Fraud Alert: Insurance Calls Not From NAR
Members of the National Association of REALTORS® have reported receiving unsolicited robocalls from various numbers, claiming to represent “NAR health insurance.” These calls and texts do not originate from NAR. The association won’t make unsolicited calls to enroll you in an insurance program or otherwise solicit your personal information.
Members may access information about the insurance products available through the REALTOR Benefits® Program and REALTORS® Insurance Marketplace.
Always be vigilant in protecting your personal information. If you receive requests for any personal information via phone or text originating from any phone number not known to you, do not respond. If you have any concerns about the legitimacy of a communication or request from NAR, please hang up and contact our Member Support team directly by dialing 800-874-6500, or Contact Us via live chat or email.
More on protecting yourself from electronic fraud: