Dave Linger, the chairman of Re/Max, said low interest rates are not the driving force behind the recovery which started in 2012. “There’s no single factor driving this market; it’s been a combination of low prices, low inventory, improving consumer confidence and a huge pent-up demand.
“The 2013 situation is so unique that those of use who’ve worked in real estate for many years have never seen opportunities like this.”
Meanwhile the chief economist of the Portland Cement Association, a trade group in that industry, said that while the group is projecting 954,000 housing starts for this year, “the possibility of one million starts in 2013 should not be dismissed.
“Although the first half 2013 will be mired in a fiscal cliff hangover, we are decidedly optimistic about second-half economic growth, job creation and consumer sentiment—all of which translate into stronger home sales and sales activity,” said Ed Sullivan.
Not only that, but the recovery will be seen in all 50 states, as each will see an increase in new single-family home inventory this year.
PCA goes on the record as predicting over 1.1 million housing starts in 2014.
December’s solid single-family housing starts and an unexpected jump in multifamily starts are clear signals that 2013 should begin strongly for U.S. housing, according to Fitch Ratings.
Single-family housing starts came in at 616,000 for December, which was on target with Fitch’s expectations. However, multifamily housing starts vaulted to 338,000. Fitch said the increase may be attributable to good weather and the aftermath of Hurricane Sandy. However, it should be noted that the multifamily numbers were strong in most regions of the country.
“Most housing macros continue to grow, helped by favorable affordability and buyer psychology,” said managing director Robert Curran. “The major public builders are pacing the industry as reflected in their net orders and backlog.”
Unlike PCA, Fitch expects the rate of growth to moderate as 2013 wears on.
Fitch estimates that for 2012 single-family housing starts improved about 24%, new home sales rose approximately 20% and existing home sales grew 10%. As a result, it expects housing growth to be somewhat less robust this year.
Fitch projects 2013 single-family starts to expand 18%, new home sales up 22% and existing home sales should increase 7%.
Avison Young’s commercial real estate forecast this year for both the U.S. and Canada said the markets have a healthy balance of risk versus opportunity.
"With all the headwinds that continue to plague our industry, what we at Avison Young have been advising for the last three years will continue to be our mantra: stay patient, risk-manage your strategy on the buy-side, and take advantage of off-market and distressed opportunities when they present themselves," comments Mark E. Rose, chairman and CEO.
The early signs of a housing recovery are triggering the question: "Is the U.S. at the bottom?" The lack of development is providing confidence for investors making value-add acquisitions, and core Class A product is expensive everywhere.
Rose said, "What we are recommending to clients is clear and consistent. Focus on building capital positions in 2013, perhaps selling non-strategic assets to fund a war chest; and arrange for access to additional debt and equity, as 2014 appears bright.
“Continue to execute on current plans in 2013 as the environment is likely to remain stable. Rebalance investment portfolios, according to a five-year strategy horizon, and adjust your corporate real estate occupancy. If you are financing or refinancing, seek longer-term maturities at today's unprecedented low rates."