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Investor Demand WIll Help Apartments Weather Recession, Says Grubb & Ellis Economist
Published: April 09, 2008
By Anuradha Kher, Online News Editor
Santa Ana, Calif.--Evidence suggests that the United States is now at the beginning of a recession, but the apartment industry is best positioned to weather the downturn, according to Bob Bach, senior vice president and chief economist, Grubb & Ellis Company.
There is fair amount of investor demand in the multifamily industry as compared to all other property types. In addition, the Fannie Mae and Freddie Mac loans are preventing construction of multifamily from falling,” he tells MHN.
The labor market shed 80,000 net payroll jobs in March, and the January and February totals were revised lower for a first quarter loss of 232,000 jobs, which Bach feels tells part of the story.
At the same time, Bach points out that the National Bureau of Economic Research has not yet made this prediction because it measures real GDP, real income, wholesale and retail sales and industrial production, in addition to job losses.
“We are doing fine on some of these indicators, like real income, and others like real GDP cannot be measured yet,” says Bach. “But the job losses do tell a story.”
The silver lining according to Bach is that the percentage of job loss since the December peak is less than comparable periods at the beginning of the prior six recessions.
“This raises the possibility that this recession will be reasonably short and shallow followed by tepid recovery,” concludes Bach.
