New Study Offers Brighter Outlook for 2011

The real estate market has been struggling along for quite a few years now, with foreclosures and low home prices everywhere. However, the economy is beginning to recover, albeit slowly. A new study from PwC actually points to greater confidence in the real estate market during 2011. Will this be the year of the “big turnaround”? Experts say it’s possible, but don’t bank on it. Even if there is a turnaround, it will be a gradual process. The damage done in the past decade cannot be reversed in just a single year.

One of the most significant signs that the real estate market is going to start gaining ground on a national level is the decrease in jobless claims. More jobs available means more people working. That equates to more people in a financial situation where buying a home is a feasible option. While it might take a few months for the trend to start, experts predict that 2011 will see a new resurgence in home sales, particularly in multi-family properties.

Another factor here is the decrease in capitalization rates. 27 out of 31 markets in the survey by PwC actually showed rate decreases. Industrial real estate is also looking up, though the situation for retail real estate is not quite so good. Consumer spending is the largest factor in retail expansion, and consumers are still unsure about spending too much of their money, with worries about inflation rising. Experts predict that it will be close to the end of 2011 before the retail real estate market picks back up again.

The main point here can be summed up as, “Recovery is coming, it’s just taking its time to get here for many sectors.”