In spite of a small gain earlier this week, the stock market is still suffering, and many real estate experts are beginning to wonder whether or not this economic downturn will make the real estate market worse. Among them is the real estate reporter A.D Pruitt.
According to Pruitt “Commercial real estate could be losing its appeal as a safe-haven investment given the market turmoil and constrained bank financing.” Pruitt believes that “The stock market performance of real estate investment trusts, while still healthy, is down from a two-year hot streak.”
And Pruitt isn’t the only one who’s worried. Bob O’Brien, the vice president of a real estate company, also believes that there’s currently cause for concern.
“The uncertainty impacting the overall economy and other industries has had less of an effect on the real estate industry,” he says. “At the same time, the wall of debt maturity that will come due between now and 2015 still may present short and longer term challenges for the remainder of this year and into 2012.”
The report, according to Pruitt, also noted “That subdued consumer spending, reduced federal spending, slow job growth and a weak housing market threaten to delay the recovery. After hitting a bottom in March 2009, commercial real estate has been on a steady ascent because investors were confident a brutal downturn was behind the market, and that landlords would be able to start raising rents and occupancy rates amid an economic recovery.”
It remains to be seen how, exactly, this economic downturn will affect the real estate market in Chicago. In all likelihood, though, Chicago will remain a buyer’s market for the time being, home owners may find that their homes will appreciate in value more slowly than in years past, and renters may be forced to negotiate higher rates.
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