Commercial Real Estate Index
In addition, while large corporations do
not have difficulties securing capital, small
businesses have been struggling to find access
to financing. Because of the small nature
of the business, these entrepreneurs cannot
issue bonds like IBM or Disney. Banks have
also taken a much tighter approach to any
borrowers without an established name. Small
businesses, therefore, typically have relied
on their savings and their housing equity to
gather funds to test out new business ideas.
But housing equity – housing asset value
minus mortgage liability – has greatly shrunk
in the painful aftermath of the housing market
crash. The aggregate homeowners’ real estate
equity stood at $6.1 trillion today versus $13
trillion in 2006 according to Flow of Funds
data from the Federal Reserve. According to
Census, there are 74 million homeowners.
So on average, the average equity per home
owner in 2011 is $82,000, which is down from
$170,000 in 2006.
During the quarter, the soft dollar did afford
U.S. products a competitive price advantage.
International trade expanded and net exports
were positive. Exports of consumer goods
increased 6.0 percent, while imports of goods
rose 1. 3 percent during the quarter. The grow
ing inflation in international markets remained
a significant concern for international trade. In
the U.S., consumer prices rose 3. 3 percent dur
ing the second quarter, with inflation expected
to continue growing due to rising inflation in
producer prices adds. In addition, prices have
been rising at much faster rates for trading
partners in European and Asian economies.
Looking ahead, GDP growth will only be
around 1. 5 percent this year and 2. 5 percent
in 2012. There will be some moderate boost
in business spending due to this year’s special
tax incentives (such as a 100 percent oneyear
depreciation allowance rather than a 15 year
schedule). However, such an expansion means
only 1 to 2 million jobs created per year, and
not the 3 to 4 million annual job gains needed
to truly get us back to normal.
SIOR Index Results
Against this economic backdrop, com
mercial real estate is feeling the pinch. The
second quarter SIOR survey results mirrored
the stagnating economy. After six consecutive
quarters of incremental improvement, funda
The Commercial Real Estate Index, rep
resenting second quarter 2011 data, retreated
2. 6 points. The national index, based on 10
variables pertinent to the performance of U.S.