The Economy: Lots of Speculation, Very Few Answers

This post was written for The Ground Floor by Trisha Riggs communications director at the Urban Land Institute, from the "Spring Council Forum" in Dallas.

The only certainty for the economy is uncertainty -- which could mean an extended period of rocky times for the U. S. real estate industry. That’s the message being delivered in numerous meetings and real estate sessions at ULI’s spring council forum this week in Dallas. As a result, real estate professionals need to be prepared for “rain or shine,” according to one industry analyst.

Some observations from one panel:

Not so bright: 2008 and 2009 will be slow for most sectors of real estate, as the ramifications of the housing market collapse work through the rest of the industry

Not so bright: Consumer spending will continue to drop, reflecting the loss of confidence due to home price declines and equity losses. Retailers are responding by cutting back drastically on expansions.

Could be worse: Commercial vacancies are rising, but are still in the healthy range. New supply in all categories is balanced, with construction at less than 2 percent of existing inventory.

A view from Europe: The farther West one moves (as in closer to the U.S.),  the worse the economy in each country seems. The farther East, the better it seems. Still, many overseas investors consider the U.S. economy to be resilient, all things considered, and the real estate industry ripe for investment (due to the weak dollar)

Some good news: Job losses may not be too dramatic, because job growth did not soar during the recent economic boom. Minimal losses means a quicker return to job gains, which is key to an economic turnaround.   

Some advice for those looking to buy: Focus on quality assets. The yield for quality real estate is still better than that for other assets. "Quality wins," concluded a panelist.