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Changes Ahead
Reach Advisors' James Chung, REIS' Victor Calanog
“The future is lumpy, but not unnavigable,” said Reach Advisors prez James Chung, who joined Reis research guru Dr. Victor Calanog during a ULI New York demographics discussion last week at Kirkland & Ellis. Instead, we’re in a “jump-ball economy,” a continuation of consumers reassessing their preferences, aspirations, and constraints—and it’s a reality we’ll live with for a while. While the top 10% of income earners are still relatively strong, the majority of households aren’t in the position to rebound in the short- and mid-term, he says. Keep an eye on demographic shifts: a 10% increase in immigrant population’s birthrate, 80% of twenty-somethings who’ve never married, and a shift to women in earnings and education. He predicts another 50 million people in the US by 2025, and 36% increase in the 65-plus population by the end of the decade. “Multifamily will see the tailwinds,” he says.
Reach Advisors' James Chung, REIS' Victor Calanog, Related’s Gregg Gushee, Massey Knakal’s Bob Knakal, AmCap’s Jake Bisenius, and Kirkland & Ellis’ Stephen Tomlinson
Victor and James join Related’s Gregg Gushee, Massey Knakal’sBob Knakal, AmCap’s Jake Bisenius, and Kirkland & Ellis’ Stephen Tomlinson. Victor says we might be back to where we were pre-recession in 2014 or 2015, and projects this year’s GDP growth to be between 3.5% and 4%. State and local government cutbacks will remain a drag on growth, and expect volatility in monthly job numbers; interest rates will stay low for the rest of the year, but watch out for inflationary pressure. Multifamily shows promise: Q4 saw a sharp decline in supply, and some submarkets are showing rent growth above 10%. There’s also empirical evidence for residential “doubling up” of subfamilies and the 25 to 34 set living with parents. Overall, several markets have hit bottom, while others are on way to a healthy recovery, he says—but there’s still risk in markets withoversupply.