This article was written by Catherine Davies-Nelson, a student in the UST MS degree in Real Estate.
Dr. Tom Stinson, Minnesota State Economist, recently spoke at the University of St. Thomas Shenehon Center for Real Estate on the 2012 Real Estate Outlook. He communicated 2012 will look much like 2011, and likely to improve in 2013 and 2014. Looking at the big picture and as noted by many economists, this recovery is a long slow recovery, slower than the past recoveries.
Regarding the real estate recovery, Dr. Stinson asserted that “household formation is key” as the demand for residential housing ultimately drives demand for commercial development. Lackluster economic growth has encouraged people to move in with friends and family. When the economy improves enough to encourage these individuals to move out and help clear the oversupply of properties, real estate prices will recover, however they will recover to a new normal. Favorable to this household formation growth, is an approved consumer sentiment and a declining unemployment rate. Minnesota’s current unemployment rate is at 6.5% (2% below the national average). Additionally, there is more confidence (30% more) the U.S. won’t go back into a recession. (more…)