2020 CRE Outlook

2019 has wrapped up and we are moving rapidly into 2020. The real estate industry in New Mexico has been recovering for the past two years and, nationally, the recovery has been in progress for several years.  Our economy is in the expansion stage of the real estate cycle. Will we continue on an upward trend in 2020, or is a recession looming? According to  Peter Linneman,  Doctor of Economics and principal of Linneman Associates, there are several reasons people believe the national recovery is about to end. Some are saying this has been the longest recovery in recorded history so “we are due”.   They also believe business investment activity and confidence are adjusting downward. While concerns like these are true, they do not always tell the whole story. For example, this has been the longest recovery in recorded history, but it has been a very shallow recovery as well. We still have not hit some past peaks, giving us more time in the recovery phase. Business investment activity may be low, but consumers are still spending their money. For these reasons, Dr. Linneman states, “there is no doubt that the recovery will eventually end, but we believe it will continue well into 2020 and perhaps 2021.” How do these thoughts and trends on the outlook for 2020 apply to New Mexico and our market? New Mexico’s economy tends to lag behind the national economy by 9 to 18 months.  This lag time is a boon for investors who are able to hold the current national economic conditions in one hand, and use them like a crystal ball for predicting the future economic conditions for New Mexico.  Knowing what’s coming allows for more precise decision making.  Predictions for a future economic downturn in New Mexico hold true to what we have seen in the past.  While New Mexico never gets the “high highs” of an economic upturn, we don’t get the real “low lows” either.  New Mexico’s economic growth is currently fueled by a substantial backlog of construction projects and housing starts, and we would predict the lag time before the downturn to be longer than normal as well.     This outlook is provided by NAI Maestas & Ward CEO, Debbie Harms, and accounting specialist and blog writer, Ashley Vanaman.   NAI Maestas & Ward is a full-service commercial real estate company serving New Mexico since 1996. The company is a dynamic commercial real estate firm offering best-in-class real estate services in brokerage, property management, asset management, business brokerage and development services. Click here for the Linneman Letter Winter 2019 Report.