According to representatives from RCLCO Real Estate Advisors, a real estate consulting firm, the national economy could increase at a rate not seen since the 1950s. As the threat from COVID-19 slowly begins to fade, all segments of the real estate industry may be poised for big gains as well.
In a March 18 webinar marking the anniversary of pandemic-related shutdowns, a trio of RCLCO consultants reviewed how the pandemic has affected various segments of the economy as well as what current trends say about the coming years.
“We’re going to see some of the best GDP growth since the 1950s,” Director of Research and Strategy Bill Maher said.
Statisticians from Oxford Economics project a 7 percent increase in GDP this year. Other forecasters are predicting up to a 10 percent increase.
The Oxford forecast attributes 3 percent of the expected GDP increase to the recently passed American Rescue Plan Act. A significant portion of growth is also expected to be driven by pent-up demand that will be unleashed as more COVID-19 related restrictions are lifted.
The massive government stimulus combined with growing budget deficits could overheat the economy and lead to inflation. Some models are projecting a 3 to 4 percent inflation increase this year, with rising energy prices serving as a major catalyst.
According to Managing Director Charles Hewlett, the key determinant to getting the economy back on track has shifted from “flattening the curve” to getting people vaccinated. The variance of vaccinations from state to state illustrates how the country will likely experience a patchwork economic recovery with significant differences between regions. While overall trends seem to be pointing in the right direction domestically, he cautions that there are still risks. For example, Europe has had issues getting vaccines distributed and may be headed toward a third spike in cases.
“I don’t think we are out of the woods but we’re headed in a good direction,” Hewlett said.
A Strong Market Leads The Way
As many real estate agents can attest, the single-family home market remains very strong across much of the nation. This is true of new and existing homes as well as rental properties.
Growth in multifamily and warehouse properties are also expected to outpace overall economic growth. However, the office and hotel market recovery will likely lag behind due to many people still working from home and the reduced demand for business travel. Retail sales are expected to rebound, though e-commerce will continue to increase its share of the market.
The Dallas-Fort Worth area has fared better in terms of employment than most major urban centers, reporting only a -2.1 percent year-over-year decrease in employment. That’s especially impressive considering the much higher numbers posted in metro areas like New York (-10 percent), San Francisco (-9.7 percent), Los Angeles (-8.8 percent), and Seattle (-8.5 percent).
“I think that the Sun Belt and sort of Sun Belt north like Kansas City and Indianapolis, these are the places that will probably have the best housing demand, the best retail demand, and will look the best,” Maher said.
