Economic Forecast
I attended an event that was held by the Chicago Association of Realtors Friday evening. They had 3 prominent economists discuss their take on the market in general and on real estate in particular. The first speaker agreed that real estate had been soft in 2006 but that the market as a whole is doing very well. The first thing bolstering our markets is Global Liquidity. China and Asia are seeing run away growth - and need to put their money somewhere. That “somewhere” is in our markets - both the bond markets and the stock markets. She sees no end in sight of that trend. In addition, corporate balance sheets are extremely strong with 18 quarters in a row of double digit earnings growth. So, American business is in great shape. She expects continued investment in capital expenditures. So - even though housing is down, the economy on a whole is quite robust.
The second speaker was the head economist for the National Association of Realtors. He was in town visiting from D.C. Even though the real estate market declined nationally in 2006, it was STILL higher than 3 years ago when it was considered to be healthy. Interestingly, the markets that have seen the biggest declines are Florida and California. The good old conservative Midwest that didn’t see the run-ups has also not seen the down turns. Appreciation in Chicago, in fact, remained at 1% - meaning our market is holding steady. This speaker also saw signs of the housing market bottoming out and starting to turn up again. My experience concurs: since New Year’s, buyers are coming back into the marketplace and are seriously looking.
The final speaker addressed the downtown Chicago market - which has been and continues to be hotter than a firecracker ever since Millenium Park opened. Developers coming on with pro-formas of $500/sq ft are, in fact, selling at over $600/sq. ft. And are being sold out in weeks. Probably a factor of the robust economy the first speaker addressed. I am often asked: “where do people get the money?” Believe me - it’s out there!
“All things with Exuberance”
mary!
