Commercial property helps cushion economic blow in US market
The economy is being helped by the commercial property boom happening in the US, but even that market is losing steam fast.
Over the last two years, there has been a good amount of growth in the commercial property market within the United States. In fact, that specific sector of the property market has done well despite the fact the rest of the market has plunged in recent months.
According to economists, the growth in the commercial market has helped to provide a cushion to the overall state of the economy here. Yet even though this has been the case, there is evidence that the commercial market is beginning to slow – and quickly. Economists say the property market will likely put a hold on the economy for the next several quarters.
The Department of Commerce reported that fixed investments dropped by some US 96.2 billion dollars, which translates into a 16.9 per cent drop in the residential property market last year. When this happened, it dropped a full percentage point off the GDP growth in 2007.
The real estate foreclosure market is another factor that plays heavily on the economy, not to mention the overall growth potential of the market. According to Housing Predictor, a forecaster for all 50 states, the number of US foreclosures will continue to grow. The organization says that it is likely to see substantial growth from this market for the next 3 years.
Originally the organization said that some 2.5 million foreclosures would happen through 2009. This number has been addressed and now stands at the 3 million mark.
These numbers were changed in part due to the increasing challenges that the credit crunch is creating, including the rising unemployment and dropping consumer confidence factors in the economy already.
There is little doubt that the US real estate market will be a contributing factor to a struggling economy in the coming months.