America’s Urban Markets Universally Strengthened Last Month

by 11 Mar 2013

As retrospective analysis confirmed, February’s economic returns have affirmed that the property sector’s recovery has begun to even out. As I noted in a prior post, consumer confidence in the housing market has notable rebounded. However, there are some signs of the recovery decelerating some, as the return to health has abated from a sprint to a jog. Monthly housing starts are beginning to decrease slightly, as January was the first month in a long succession to show a national decrease in housing starts.

That being said, the Federal Reserve’s February Beige Book noted that of the report’s twelve designated major housing markets, all demonstrated growth in economic activity. As a new post from points out, these districts (which ranged from Kansas City to San Francisco) all contained decreasing inventories and rising property values. This pattern has been a defining growth engine of the housing recovery, and it’s comforting to see that it’s occurring on a national scale. As a particularly interesting note, many of these markets are seeing a pickup in purchase of low-end property, with this trend occurring with notable strength throughout metropolitan Philadelphia.

Another key finding of the Federal Reserve’s February report is that home construction near universally increased as well, with local homebuilders widely initiating new projects throughout the respective metros. One of the report’s key findings is that residential real estate in the nation’s key housing markets reported exceptional growth metrics, and even outperformed the more lukewarm returns observed in the commercial real estate sector. This is especially heartening news, as commercial real estate was the sub-sector winner as of the close of 2012. 

The Federal Reserve Beige Book’s evaluation of February’s nationwide commercial real estate performance was more lukewarm, with the growth (or lack thereof) across major metros being more inconsistent. Commercial real estate’s less impressive performance could be a consequence of the stagnant job market, as an impasse in job growth could be sloughing off into the health of commercial property as well. However, commercial construction rates have seem to grown last month as well, though not at the more rapid pace of residential construction.

So what’s the takeaway for property investors? The primary lesson seems to be that the recovery in residential property is catching up to that observed in commercial real estate. Loan demand seems to have increased near-universally throughout the observed metros, with loan demand rising especially sharp in Atlanta. Shrewd investors would seem well advised to survey the current landscape and stay ahead of possible purchase trends- sensible investment in real estate throughout high-demand areas could have an especially promising outlook for value appreciation. Considering that new construction is gaining momentum throughout many of these areas, targeted investment in pre-existing property seems the best way to ride consumer trends to a thicker bottom line.


Should CFPB have more supervision over credit agencies?