The indicator that Cannon is watching most closely is the billions of dollars in increased federal spending that is coming in wake of the Sept. 11 terrorist attacks in New York and Washington, DC.
"We're talking more than $100 billion, and the market goes as the money flows," Cannon tells GlobeSt.com. "That will filter down to all phases of the economy."
He says, "If the government makes available a greater supply of money, then it takes only a little time for it to get into the economy."
Cannon compares the current economic malaise to the Hurricane Andrew period. "The Clinton administration was looking at a recession then," he recalls. "One year later, we were on an economic expansion not only here but nationally that continued all the way through the first part of this year."
Cannon says it is also important to understand the cyclical nature of economics and the real estate industry, especially in the single-family and multifamily homebuilding market.
Tentative results of an Integra Realty survey of suburban homebuilders, for instance, confirms that volume is down in the number of sales prospects for homes in the range of $150,000 to $300,000.
"But the quality of the lookers are converting to contracts, and the homebuilders haven't seen a decline in demand," Cannon says. "Nor are there significant reports of cancellations of contracts."
Then there is the impact this year by Federal Open Market Committee on the interest rate.
"Interest rates are the lowest now since the 1960s," Cannon says. "The honest people will tell you there is a rash of refinancing, because the consumer is able to afford a higher priced product. Because the demand is greater than all those factors, then the volume of sales may look like it's down, but demand is actually up because all of those people are now looking for a better lifestyle."
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
