An April 24 panel discussion on the prospects for real estate in the current economic recession, MIT economics professor William Wheaton offered these thoughts on a likely turnaround scenario, “The first to recover will be the banking, insurance, and finance industries, which are already well on the road to recover. Then the housing market will stabilize and consumption will pick up. An increase in production is about a year away – maybe even six months away,” he said, “since inventory is already down to almost nothing.”
Wheaton added that unemployment will continue for some time after the recovery begins, “In every recession, employment is absolutely the last thing to come back.” He continued, “One reason is that the economy uses recession as a time to restructure,” he said, giving companies an incentive to lay off workers and create greater efficiency “from the ground up.”
The unemployment numbers are a lagging indicator. Meaning that the economy will get better before the unemployment rate reaches its highest point. Commercial Real Estate is seen as the next shoe to drop. With General Growth Properties being the first big indicator of that. It will be interesting in the next 6-18 months to see how all the new square footage is rented and how the increase in capacity affects the overall market.