Despite Global Economic Uncertainties, Experts Predict That American Real Estate Will Slowly Strengthen During 2015

For the first time in a long time, Americans are hearing that the domestic real estate market is actually looking very healthy for 2015. According to the National Association of Realtors (NAR), decreased unemployment rates have largely contributed to a stronger U.S. economy over the past year.

Even though the global real estate industry doesn’t seem as strong, according to a recent World Property Journal report, and even though a global decrease in property values could slightly weaken the progress of the American industry, it’s unlikely that weaker foreign economies will impact the U.S. too much.

Office building rentals are expected to increase by about 3.3% within the next year, the report states, and office building vacancies are uncharacteristically low in major cities like Washington D.C., New York City, and San Francisco.

Industrial building rentals are also expected to increase over the next year, rising from 2.4% to about 2.9% by next year, and vacancy rates are expected to start falling from 8.4% by the end of 2014, reaching around 8% during 2015.

In the residential sector, the only area where vacancies are predicted to increase is in the apartment-rental market; Wall Street Journal reporter Tess Stynes states that industry experts predict that vacancies in rented apartments will increase from 4% to about 4.3% nationally throughout the coming year. Even though vacancy rates under 5% are generally indicate that the industry is in a “landlord’s market” (meaning that landlords are more likely to get better deals than residents are), it doesn’t seem that this trend will affect average Americans too much.

Stynes notes that the NAR’s chief economist, Lawrence Yun, believes that better employment rates have allowed Americans to make real estate investments. Considering that a potential buyer’s entire financial situation is taken into account before the person can be approved for a real estate loan — and considering that most Americans don’t have much more than the 10% down payment when it comes to buying a home — it isn’t surprising that better employment opportunities will create stable financial situations for individuals, who will then find it easier to invest in a home.

As Yun states, “job growth is the catalyst” for an improved domestic real estate market. Economists may not be able to predict what the rest of the world will be doing during 2015, but it should come as a relief to many Americans that their own economy shows many signs of staying strong over the next year.

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