LAS VEGAS, NV -- As lenders gathered here this week to discuss income-property financing programs, nervous optimism filled the air.
The overall forecast is mildly positive -- particularly as compared to 2009. Funding sources were battling liquidity in 2008; rebuilding balance sheets in 2009; and are now earning profits in 2010 which means mortgage investing is back in vogue again.
However, lenders fear more uncertainty as the capital markets are imbalanced with relationship to income-property supply & demand fundamentals. Based on key opinions of various lenders an economic outlook relating to realty capital markets is summarized as follows:
· Modest job growths combined with controlled government spending discussions directly affect the current economic recovery, slowly trickling into the real estate capital markets. A 10%+ unemployment rate is still problematic, though.
· Slowly recovering economy due to improved CMBS pricing, housing sales and employment statistics.
· Policymakers are also helping by holding interest rates low at levels favorable for real estate markets.
· Commercial-property problems loom including hanging vacancy (especially office and retail), less space needs, increased operating costs.
· As lenders workout of their legacy problems, new funding goals surface which are clearly more ambitious than 2009.
· Life companies under less pressure than banks to liquidate assets, if recovery is on the horizon – longer-term balance sheet hold.
· Still a “buyers market” bias due to flat or declining pricing and lower demand, a worrisome scenario for sizing property values.
Yet the biggest trick will be finding suitable real estate investments as the property markets are recovering slower than the capital markets.
Contact: Nat Zvislo, Research Director, Toll Free 800-994-RECI (7324), director@reci.com
http://www.reci.com/
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