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The recovery from the 2008 economic recession has been a slow one with real estate being perhaps one of the hardest hit industries during the recession. In Florida, investors in all asset classes are feeling uncertain about rising costs of rental rates and projected interest rates adversely affecting cap (capitalization) rates.
Ryan Severino joins us this week to discuss the recovery from the recession and its effect on real estate investment. As a senior economist and Director of Research at REIS, one of the nation’s leading real estate data providors, Ryan can provide expert insight on national recovery and how it translates to a state level. He also clears up the uncertainty over cap rates, interest rates & asset classes in Florida real estate.
- In 2008, U.S. experienced deep balance sheet recession
- Excess debt built up in national economy
- Flow of credit ceased
- Slow recovery period
- 2-2.5% GDP growth rate annually (next several years)
- Class A inventories on rise, B & C inventories diminishing
- Results in top-of-market rental rates in all asset classes
- Southeast FL markets experienced above average recovery
- Supported by foreign investment
- Rents rising quicker than income recovery
- Miami, Ft. Lauderdale becoming unaffordable markets
- Central, Northeast FL markets still generally affordable
- Multi-Family properties becoming much more competitive
- Cap rate compression beginning to plateau
- Commercial properties experiencing early-stage recovery
- Room for cap rate compression
- Cap Rates not effected solely by interest rates
- Tied more closely to economic recovery
- NOI (net operating income) effects cap rates
Ryan’s Tips:
- Real Estate is a cyclical investment market
- Follow proven market trends
For more information and research data on a variety of asset classes, visit the REIS website here