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Investments

Latest ULI forecast predicts faster housing upturn, moderate CMBS issuance growth

An Urban Land Institute survey of 39 economists showed marked improvement in the housing market from March 2012, the last time the survey was conducted.

The issuance of commercial mortgage-backed securities also is expected to rise gradually.

But real estate economists and analysts surveyed scaled-back expectations for growth in the nation's economy, as continued uncertainty over Europe's debt crisis, the outcome of the presidential elections and tighter financial regulations hamper growth.

The findings were released Wednesday during the ULI's semi-annual conference.

On housing, survey respondents predicted that single-family housing starts will reach 530,000 in 2012 (a 30,000 unit increase from the March survey projections), 675,000 in 2013, and 800,000 in 2014.

The national average home price is expected to rise by 3.2% this year, increase by 3.9% in 2013 and climb 5% in 2014 — far above the March predictions. The previous forecast predicted a 0% price increase this year, a 2% rise in 2013 and 3.5% price growth in 2014.

The survey, conducted between Aug. 21 and Sept. 14, is the second in ULI's new series of surveys of economists and analysts. The first one was released last March.

According to the latest forecast, the real gross domestic product is expected to rise by 2% this year, stay at 2% in 2013, and then rise by 2.9% in 2014. The nation's unemployment rate is expected to fall from 8.1% now to 7% by 2014.

CMBS, a key source of financing for commercial real estate, is expected to rise marginally to $35 billion in 2012 from $33 billion in 2011 before rising to $45 billion in 2013, and then $60 billion in 2014.

While the $60 billion figure is nearly double what is expected for this year, the nation probably needs more than $60 billion in CMBS issuance for a healthy real estate market, said Douglas Poutasse, executive vice president at Bentall Kennedy in Boston during a conference call with reporters.

Jim Clayton, vice president of research at Cornerstone Real Estate Advisers in Hartford, Conn., said CMBS still faces headwinds with regulation that it doesn't yet know about.

"Even though we are doubling (from 2012), it's still a very small number," said, Clayton, who participated in the conference call.

kcurry@housingwire.com

@communicatorKLC

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