Urban Land Institute – Real Estate Forecast to 2018

Urban Land Institute Outlook Report

The Urban Land Institute released it’s Fall 2016, 3 year Short Term housing and real estate outlook report with predictions from 51 real estate and economic experts.

Quite a few organizations including NAR, National Association of Home Builders, Trading Economics, Kiplinger, Freddie Mac, Fannie Mae, Bloomberg, Moodys, and more produce their own housing forecast reports.

Which ones are credible and reliable outlooks of housing activity ahead?  If you’re a homeowner, investor, mortgage agent, or realtor, it may be wise to read and weigh a number of them for a more reliable forecast.

uliThe Urban Land Institute, or ULI, is a Washington, D.C., Hong Kong, and London think tank and research institute whose purpose is to provide leadership in the responsible use of land to build thriving communities worldwide.

Some of its organizational mandate is to encourage progressive development, conduct research in sustainability, smart growth, compact development, and workforce housing. The ULI was created during the Great Depression in 1936 and now has 38,000 members (according to Wikipedia).

Discover more on Long Term Housing predictions for the US and the San Francisco Forecast, LA Forecast, San Diego Forecast, and the Toronto Forecast for 2017 to 2020.  It’s an interesting report for investors, realtors, first time homebuyers, mortgage agents, and businesses in the construction and renovation trades.

The ULI housing and real estate report offers up specific forecasts for:

  1. Broad economic indicators
  2. Real estate capital markets
  3. Property investment returns for four property types
  4. Vacancy rates and rents for five property types
  5. Housing starts and prices

From the report overview, HUD states:

“The ULI Real Estate Consensus Forecast for October 2016 projects continued economic expansion over the next three years but at a somewhat slower pace than the prior two years; relatively high but declining commercial real estate volumes; continued commercial price appreciation, rent growth and positive returns but at more subdued and decelerating rates; better than average vacancy/occupancy rates, except for retail; continued growth in single family housing starts but remaining at levels below the long-term average.”

All indicators are above their 20 years averages with the exception of commercial price appreciation, equity REIT returns, and NCREIF returns. Looking ahead to 2018, HUD forecasts: commercial property price growth, equity REIT returns, NCREIF returns for the four major property types, retail availability, rental rate growth for office and retail, RevPAR growth for hotels, and single-family housing starts will perform below their 20 year averages.

Commercial Real Estate Still Looking Good

From the report:

“Commercial real estate prices are projected to grow at relatively subdued and slowing rates in the next three years, at 5.0% in ‘16, 4.0% in ‘17 and 2.5% in ‘18, all below the long-term average growth rate of 5.7%.”  “Capitalization rates for institutional-quality investments (NCREIF cap rates) are expected to inch up gradually to 5.2% in 2016, 5.3% in 2017 and 5.5% in 2018.”

“Commercial real estate transaction volume has consistently increased for 6 years and reached a volume in ‘15 that is surpassed only by that in ‘07. Volume is expected to decline for the next three years to $475 billion in ‘16, $450 billion in ‘17, and $428 billion in ‘18. Despite the decline, these volumes continue to stay substantially above the 15-year average of $280 billion.”

Roaring Times for Residential Real Estate

Hud says housing starts will increase 30+%, from 714,500 units in 2015 to 875,000 units in 2018, remaining below the 20-year annual average. Compare that to other national US forecasts for these periods.  How will Donald Trump affect US housing numbers?

Rental Apartment Availability to Increase

The report reveals the experts forecast an easing up of rental apartment vacancies with the national rate up 5.23% in 2018 however these rates are still below the 20 year average vacancy rates. The report doesn’t forecast apartment rentral rates in tight markets such as San Francisco or New York.

Screen Capture of Apartment Vacancy Rate Chart to 2018 Courtesy of HUD.com


You can read the full report on the HUD website.

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