With some economists predicting a recession on the horizon, the surge in job creation at the end of November led to an upswing in the market. Further, NREI (National Real Estate Investor) online shared a report predicting a solid year ahead for the multifamily sector. We take a quick peek at the positive news in today’s BAM Blog…
According to the information in a recent Forbes piece, the employment numbers were almost uniformly positive by the end of November 2019. They cited unemployment hitting a 50-year low, falling to 3.5%. The news making headlines was the greater-than-expected job growth last month: over 260,000 new jobs. After the report came out, the stock market got a corresponding lift to the good news. In further good news, wages reportedly also saw a small increase.
As the year heads to a close, the overall positive economic news may help to dampen fears of a recession. BAM founder and CEO, Ivan Barratt, previously wrote, that although isn’t predicting a recession (that’s the good news); however, he is noting that there will likely be a period of slow growth and continued falling cap rates. So although we may not experience a true technical recession, i.e., two consecutive quarters of negative GDP, for commercial real estate investing, prices won’t go down anytime soon, quality assets will still bring higher prices, and those assets’ returns will remain 200-300 basis points above the risk-free rate or 10-year treasury: right now 1.75%.
A piece in NREI also shared some predictions, and the forecasters believe that 2020 will be an overall positive year for the multifamily market. Perhaps unsurprisingly, issues like ongoing trade disputes, manufacturing, and a potentially tumultuous political election season may weigh on the industry throughout the upcoming year. They cite the stats suggesting a positive year for the industry, and keeping volume at near-peak levels.
The BAM Bottom Line: With a strong jobs report, positive economic news, and an encouraging prediction, the multifamily industry can remain optimistic about 2020.
Want more info on multifamily investing? Go to investments.barrattassetmanagement.com and sign up for an account. Once there, under “offerings” you’ll find a free library with articles and videos featuring Ivan and his insider knowledge and insight, as well as a ton of info on BAM, its team, track record, and offerings.