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Kelly McGinnis (L), District Manager for grocery retailer ALDI , takes applications from people looking to fill job openings for new stores opening in the South Florida area on September 7, in Fort Lauderdale, Florida. (Joe Raedle/Getty Images)
The countrywide vacancy rate hovers around 16.7 percent and is predicted to reach 17 percent by mid-2011. Not all U.S. states reported a dismal picture for the commercial real estate sector, however. Large cities, such as New York City, Honolulu, certain portions of Long Island, N.Y., Los Angeles, San Francisco, and Kansas City reported lower vacancy rates, ranging between 8 and 11 percent.
We are in the midst of a renters market. Office rental rates will decrease by close to 3 percent by the end of this year and are predicted to decrease a little more than 2 percent in 2011.
Despite incentives and low prices in the commercial sales and rental real estate market, lack of available credit puts another dent into the market.
Rental Market on the Upbeat
“The apartment rental market—multifamily housing—is benefiting from modestly higher demand,” according to a NAR statement.
With people losing their homes because of loan defaults, the rental market has picked up, with vacancy rates declining to 5.1 percent during the first half of 2010.
The Lender Processing Services website reported that foreclosures in June slowed down, but overall it still hovered around 9.55 percent. Delinquent and foreclosure properties are still increasing and are consistently above January 2008 levels with the majority of defaults in Florida, Nevada, Mississippi, Georgia, and Arizona.
Home Sales Sagging
“Existing-home sales were sharply lower in July following expiration of the home buyer tax credit but home prices continued to gain,” according to the NAR.
In July, home sales declined by close to 30 percent, lower even than in 1995 when the U.S. economic growth slowed to a little over 2 percent GDP, from the 3.5 percent in 1994.
Home sales began to decline in May when the homebuyer tax credit expired. Mortgage finance giant Freddie Mac suggests that home sales between January and July were close to 8 percent higher when compared with the same period in 2008.
But NAR is upbeat, despite a 2.5 increase in the homes-for-sale inventory. Vicki Cox Golder, president at NAR, said in a recent release, “Mortgage interest rates are at record lows, home prices have firmed and there is good selection of property in most areas, so buyers with good jobs and favorable credit ratings find themselves in a fortunate position.”
Despite downward sliding sales, home values have edged up, although not quite to the 2009 levels, according to the Freddie Mac Conventional Mortgage Home Price Index.
Home values increased by 3.1 percent between April and the end of June, although home appraisal values decreased by one-half of a percent.
Amy Crews Cutts, deputy chief economist at Freddie Mac, said in a statement, “We saw increases in home values in the second quarter that were very strong across all regions—there is no doubt that some of this was due in part to the now-expired homebuyer tax credits which boosted sales activity as well as to the usual seasonal bump we see each Spring.”
