Boston Area 2009 commercial sales are off by approximately 90% as compared with the market peak. I expect to see more sales activity (not higher prices) only if sellers get more realistic, lenders dump properties on the market, and money sitting on the sidelines decides that the investment makes sense from a CF prospective or that they think the market has bottomed out.
Boston-area housing sales will continue to be slow as most pent up demand for first time homebuyers was satisfied last year with fulfillment of the tax credit buyer program (thought to expire and then renewed through the Spring of 2010). Nationwide sales, which had rebounded, fell from October to November by 16%.
Consumer borrowing continued to decline for the tenth straight month as borrowers continue to be nervous about employment and as they try to re-fund depleted investments. Not helping was the most recent employment figures, which showed that the economy continues to shed jobs, this past month to the tune of 85,000 more jobs.
One of my favorite metrics did show signs of life as the Institute of Supply Management’s service index rose to just over 50, signifying expected growth in the service sector.
In November, business added some 52,000 temporary jobs, a forerunner of full time employment .
The Boston-area jobs outlook continues to be somewhat dim as some are projecting another 30,000 job loss. This will depress the Consumer Confidence index as well as continue to expand the office vacancy rate already approaching 20%. Nationwide, we have lost more than 7.2 million jobs. The light at the end of the tunnel here is that temporary employment has grown and hours worked has stabilized; usually precursors to permanent job growth.
Developers continue to pull out of projects, the latest in a string of pull outs is the developer for the South Station Postal Annex site in South Boston. Could it be that lack of tenants and funding had any effect?
Deficits will try US ability to sell debt resulting in an increase in interest rates and further depressing both the housing and commercial real estate markets.
The major Banks have mostly repaid their TARP funds, although the bad news here is the community banks have not and their exposure to commercial and development real estate is a far more significant portion of their loan portfolio.
Keith Munsell 
