Essay on Residential and Commercial Real Estate Starts Globally

Submitted By hpv1016
Words: 8030
Pages: 33

Residential and Commercial Real Estate in US Markets:
The Real Estate Sales and Brokerage industry is projected to find solid ground during the five years to 2018, as rising home prices and sales and construction combine with rising homebuyer demand. Furthermore, consumer spending will drive business expansion, and investor confidence in real estate will help raise commercial transaction volumes. During the next five years, industry revenue is forecast to rise at an annualized rate of 4.1% to reach $128.8 billion, including growth of 3.9% anticipated in 2014.
Residential recovery
With housing prices having bottomed out in 2011, IBISWorld expects rising home prices to define each of the next five years. Many metropolitan and coastal markets demonstrated rapid price growth in the first quarter of 2013, but median list prices in other markets, especially in rural Midwest areas, continue to struggle. However, as more leading markets experience rising prices during the next few years, the overall US housing market will substantially improve. Rising home prices will directly benefit agent commission rates, thereby raising industry revenue. Furthermore, the inventory of existing homes on the market will continue to shrink during the next five years, encouraging new construction to meet rising homebuyer demand. Home construction will drive transactions for just-built properties and replenish the inventory of listings each year, keeping existing home sales growing steadily as well.
Still, unemployment and credit conditions may impose limits on the industry's recovery. Unremitting high unemployment levels will likely prevent a more rapid increase in consumer spending power, and inhibit some from obtaining the needed down payment for a mortgage. On the other hand, many consumers will be able to take advantage of persistently low mortgage rates, which are projected to rise slowly. In late 2012, the Federal Reserve announced a policy of tying the federal funds rate (which influences interest rates for mortgage loans) to the unemployment rate, stating that it would continue to pressure the funds rate downward, until unemployment falls to 6.5% in the context of low inflation. This policy will likely prevent mortgage rates from rising quickly, benefiting homebuyers and, ultimately, raising demand for real estate agents.
A strong recovery in the housing market, along with increased spending on home improvements, will drive steady growth for the Painters industry during the next five years. The US economy's overall recovery will also help the commercial construction and industrial markets regain strength, boosting the need for painters in retail and office buildings. Demand for industry services will also increase at industrial facilities, which require resistant coatings for industrial tanks and surfaces. With downstream markets growing quickly, industry revenue is forecast to grow at an average annual rate of 3.0% during the next five years to reach $31.0 billion in 2018, including 3.4% growth in 2014.
An expanding housing sector
The housing market will continue to be the largest contributor to industry revenue for the next five years. While housing starts and prices both fell during the Great Recession, housing starts have rebounded in recent years. Recovery in the housing sector is anticipated to continue during the next five years due to the low inventory of available homes. In fact, housing starts are projected to rise at an average annual rate of 10.0% over the five years to 2018, growing by 25.0% in 2013 alone. Because painted walls are an essential component of a finished house, many small operators that cater to the residential market will experience a rapid increase in demand. By 2015, IBISWorld anticipates the annual volume of housing starts to reach 1.3 million, which is within the bounds of a healthy housing market. Housing starts are not likely to reach the extreme height of 2005's prerecession boom, however, when more…