A bright spot, however, emerged when Brinkmann turned to single-family owner occupied properties. “There are some signs that this spring buying session might be a little bit better than what we are forecasting,” he said. “There are some things out there that we see that make us think that this might be the time that people start coming back into the market in bigger numbers to buy owner-occupied homes than we were expecting.”

Of course, the looming US presidential election factored into the MBA’s forecast for 2012 as well. “Weird things happens in election years,” Brinkmann said. “I think the election rhetoric around the campaign is going to serve as a headwind for the economy. And people are going say, ‘Why don’t I sit it out for a little bit until we see what happens?’ and perhaps make decisions regarding investments in 2013.”

Domestically, “one of the big overhangs in the economy right now is the deleveraging taking place among consumers,” Brinkmann said. Consumers, who had levered up and hit a max of $14 trillion had now dropped $750 billion since the recession, $500 billion of which had come in the form of home mortgages. Non-corporate businesses have seen a similar decline, he pointed out.

Also on the domestic front is the issue of jobs. Brinkmann said that, despite recent good news regarding unemployment numbers, that these jobs gains were actually not enough to replace the jobs lost during the depth of the recession. Adding to this is the U6 measure of unemployment, which factors in the underemployed and discouraged workers who have given up looking.

He said that when people ask if the job is half full or half empty, he responds “I don’t know, but clearly the glass is getting smaller.”

During his portion of the presentation, Jamie Woodwell focused on how Brinkmann’s predictions would impact the commercial and multifamily property markets. “The most direct and the most direct and the most obvious is just in vacancy rates,” Woodwell said. “That’s where you see the demand instantly hitting apartment properties, office properties, retail properties. You can see some of the different story lines that Jay walked through just right in the face of the vacancy numbers.”

On a national average, apartment vacancy rates have dropped, while office and retail remains high, due to job losses. “Going forward, what one sees is that those looser markets now are those that are probably going to see some of the faster growth, or declines in vacancy rates, whereas some of those stronger markets that we see right now—generally still positive trends, maybe not on an occupancy change basis not quite as dramatic.”

These factors all impacted owners’ ability to price. “You can see first, the impact of the relatively mild—in hindsight—recession in 2001 and the particular hit that that had on office asking rents,” Woodwell said. “If you roll forward, actually this downturn not quite as dramatic an impact but still big declines on asking rents.”

Apartments now are above their peak levels, Woodwell said, while office is currently at about 95% of peak and retail at about 97% of peak.

Regarding the amount of mortgage debt outstanding—$2.4 trillion according to MBA analysis—Woodwell said that “we’ve seen some declines in mortgage debt outstanding,” as property prices come back up, but that the velocity of the decline depends on property type and the amount of leverage.

“As the property prices come back up we start to see that over-leverage being diminished bit by bit by bit.”