Just Released Real Estate Investment Outlook November 2019



    We at the Center For Real Estate Studies continue to hold a middle-of-the-road position for the real estate investment markets. There are signs of softening in our economy and monetary policy. The Federal Chairman, Jerome Powell, is likely to evaluate economic data before additional rate cuts.

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    With strong private consumption and the strength of the service sector, which accounts for more than three-fourths of our gross domestic product (GDP), he may be forced to cut rates even further if a resolution of the trade dispute between the US and China is again delayed. The Feds might return to buying short-term Treasury bills, given the looming budget deficit, which is expected to rise to -4% of GDP in 2020


    A recession is still highly unlikely, given strong domestic economic factors such as private consumption and low and declining unemployment. So far, the sluggishness in manufacturing has not spread into the service industry, and we believe that the momentum of job creation could be maintained in the service-producing economy.  Although real estate valuations appear somewhat stretched in some markets, the prospects of a solid economic cycle may justify our current thinking. In addition, the real estate markets proved to be resilient against rising volatility during the mayhem of 2011 and 2015.


    In preparing our quarterly report, MARKET CYCLES, we take into account the input from Outlook, our monthly research source. At this point, we still believe that with midsize apartments you still get the best investment dollar for your buck. Midsize apartments generally outperform equities because of its higher yields, greater price stability, and downside protection even in a recession.  When stock markets are down (which we project will happen in 2020), they hold value and produce a positive return. They are less prone to booms and busts. Midsize apartments are now stronger than they have been in many years.


    ABOUT THE AUTHOR: Eugene E. Vollucci,  is considered to be one of the foremost authorities on real estate taxation and  investing and has authored books in these fields published by John Wiley & Sons of New York.  http://www.calstatecompanies.com