This weeks perspective is provided by Mike Sullivan:
Over the weekend I attended a few of my 12-year-old son’s baseball games. While he plays on a competitive team that is doing fairly well, the reality is that even 12-year-olds can have bad innings. Or a few of them in a row. That was unfortunately the case one game this past weekend. So to help ease the pain a bit, I found comfort in good conversation with a fellow parent who happens to have a senior position within the Febreze brand at Procter & Gamble. At one point in the conversation he asked if there is any correlation between the residential and commercial real estate markets. Good question. Among a few other nuggets, I explained that the residential market is usually the first to decline compared to the commercial market but it is also typically the first to recover. I guess one could say we are the epitome of a lagging industry.
As you have read from some of our recent posts, our market seems to be on the road to recovery, albeit slow and sometimes not-so-steady. If you believe the housing market needs to recover prior to our market doing the same, then you’re in luck, at least according to a recent article in The Washington Post (click here for article). It seems that the residential market is on the mend with strong indicators that this time the recovery will not end in a decline as it has the past several years. With a handful of houses trading in my neighborhood over the past month or so, I have witnessed this recovery firsthand!
It all seems to make sense. The economy is inching its way to a modest recovery as evidenced by a 2% increase in GDP in the first quarter, more homes are trading hands, and our activity in the commercial real estate investment market is increasing. Maybe this market of ours is connected after all.