The Real Estate Consensus Forecast released by the Urban Land Institute this month by the thirty eight real estate economists and analysts projected improvement for the economy. The already improving housing sector is expected to see housing starts nearly double by 2014 and projects home prices to begin to rise in 2013.
The prediction is that the average home price will stabilize in 2012, followed by a 2 percent increase in 2013, and a 3.5 percent increase in 2014.
New construction of single-family housing is expected to rise from 428,600 starts in 2011 to 500,000 in 2012, and jump to 800,000 in 2014.
The unemployment rate is expected to continue falling, with the rate dropping to 8 percent by the end of 2012, 7.5 percent by the end of 2013, and 6.9 percent by the end of 2014.
But, with the improving economy comes inflation and higher interest rates. These rising rates will increase costs for investors, and those surveyed do not expect substantial increases in real estate capitalization rates.
ULI CEO Patrick L. Phillips advised that while the forecast suggests that economic growth will be steady rather than sporadic, it must be viewed within the context of numerous risk factors such as the continuing impact of Europe’s debt crisis; the impact of the upcoming presidential election in the U.S. and major elections overseas.
“While geopolitical and global economic events could change the forecast going forward, what we see in this survey is confidence that the U.S. real estate economy has weathered the brunt of the recent financial storm and is poised for significant improvement over the next three years.,” said Phillips.