Bonnie Arbittier / Rivard Report
The Urban Land Institute attempts to measure optimism among real estate investors around the nation each October by asking respondents to answer poll questions to gauge sentiment.
Mitch Roschelle, a partner with PricewaterhouseCoopers in New York and Fox Business Network regular, said when the poll was conducted in October, respondents were as optimistic about their prospects for success and financial gain in 2019 as they had been in any previous year.
A lot has changed across the economic and political landscape since October, but Roschelle hasn’t felt that optimism decrease at all among the real estate crowd. He said the sector is historically where wealth is deposited for protection during economic downturns.
Roschelle spoke at the ULI’s Emerging Trends in Real Estate luncheon Thursday at the Witte Museum along with H-E-B President Scott McClelland.
He said he took a less-scientific poll among 10 real estate investors at a dinner in San Antonio on Wednesday evening and found optimism continues to be strong despite volatility in the stock market, uncertainty about the continued growth of the U.S. economy and the world economy as well as uncertainty about interest rates developing over recent months.
“My optimistic message is sort of, ignore the noise,” Roschelle said in an interview before the luncheon. “Real estate still makes sense. My pessimistic message is there are some longer-term things to focus on.”
During his presentation, Roschelle showed a slide of a pie chart reflecting the current optimism, but in order to keep things in perspective, he also showed the chart for the same poll taken in 2007, the year before the recession of 2008. The two pie charts were nearly identical, demonstrating that the optimism people feel isn’t necessarily a great measure of what might be around the corner.
In its annual survey of markets to watch in 2019, ULI ranked Dallas-Fort Worth No. 1, Austin sixth, and San Antonio 20th.
Roschelle said cities that did not make the top 10 usually are lacking something such as a large, educated workforce, strong companies providing well-paying jobs, and housing affordability, among other factors. San Antonio is working to improve in all three of those areas.
But ranking 20th in a list of the top 80 markets to watch over the next year isn’t a bad place to be, Roschelle said.
Roschelle's long-term concerns for real estate focus primarily on two areas: a shrinking workforce contributing to tight labor market driving up the cost of labor and making it more expensive to build, as well as housing affordability.
Roschelle said while the economy has been robust and still can be moving forward, there needs to be more housing. He said homes are not affordable to many Americans because there is more demand than supply. He understands that topic is top-of-mind for leaders in San Antonio who are anticipating 1 million people moving here in the next 20 years with uncertainty about where they will live.
He said he doesn’t anticipate real estate playing a large contributing role to any potential economic downturn. Roschelle said credit underwriting requirements remain more stringent than they were a decade ago when many real estate loans were too easily obtained.
“We haven’t forgotten about the financial crisis,” Roschelle said. “I think that discipline is good for our economy.”
Roschelle said he sees positive signs for the city's future all over San Antonio. When he went for a run near the Pearl on Thursday morning, he said, there were new buildings and people living and working where there had been cranes and construction sites two years ago during his previous visit. And the cranes are still present working on more new development.
He said there were fewer people staying at his hotel at the Pearl two years ago, and now there are not only more guests but there is greater activity outside and in the surrounding area.
“I’m not into the weeds with what is happening in San Antonio, but I do have a sense of places like San Antonio relative to other cities, and I’m impressed with this place,” he said.
“If it wasn’t so far, I’d live here, but I don’t know if I could root for all those Texas teams.”