Economy Watch: CRE Executives, Consumers Still Optimistic
- Feb 14, 2017
Commercial real estate industry executives are fairly optimistic about market conditions in the first quarter, and they’re taking a “wait and see” approach to new administration policies and potential tax reform, according to The Real Estate Roundtable’s first-quarter 2017 Economic Sentiment Index, which it released late last week.
The index came in at 55, seven points up from the last quarter, and is in positive territory again, since any score over 50 is positive. The Current Conditions Index increased four points from the previous quarter, ending at 55 as well. Moreover, the Future Conditions Index was 55, up nine points from the previous quarter.
Why such optimism? CRE execs are glad that the election is over, for one thing, and hope that pro-business policies are in the offing. Also, a common notion in the industry is that despite previous concerns about peak pricing, many feel that asset prices have stabilized. Although 36 percent of survey participants said asset prices increased “somewhat higher” compared to one year ago, 43 percent said they expect generally flat valuations a year from now.
Separately, consumer confidence dipped a bit in mid-February, according to the University of Michigan, retreating from the decade-peak recorded at the end of January. Much of the decline was because of a drop in the Expectations Index.
Even so, confidence remains quite favorable, with only five higher readings in the past decade. The university further asserted that the data do not reflect any closing of the partisan divide. About a third of respondents are favorable to (the expectation) of the new administration’s policies, and about a third are decidedly against the expected policies, and are optimistic and pessimistic respectively.