Media Contact: Jane Dollinger / 202-383-1042

WASHINGTON (May 14, 2015) – While the commercial market still faces its share of challenges, REALTORS® specializing in commercial real estate expressed confidence in the marked improvement seen in the market over the last year at a commercial economic issues and trends forum at the REALTORS® Legislative Meetings & Trade Expo.

National Association of REALTORS® Chief Economist Lawrence Yun led a panel discussion about the forces shaping commercial real estate markets. The panelists agreed that the market has improved and expressed confidence that continued recovery in the economy will drive commercial real estate growth.

“Commercial real estate usually recovers two years behind the economy; however, NAR members who practice commercial real estate are seeing a three-to-four year wait,” said Yun. “It has been a long and slow recovery, but it is happening.”

However, there are still headwinds facing the commercial sector. Subpar Gross Domestic Product growth, stagnating wage growth and low employment rates are all affecting demand for commercial properties. Improving those underlying fundamentals is instrumental in maintaining a strong commercial market, said Yun.

He said another major hurdle facing the recovery is the lack of financing available for small investors. While large companies can access financing from Wall Street or international buyers, most financing for smaller investors still comes from regional or local banks and credit unions. Many of those small banks are hesitant or reluctant to give out commercial loans.

“New financial regulations for all banks, big and small, are resulting in smaller banks bearing proportionally higher compliance costs,” said Yun. “Why are the little guys taking the brunt of this? Maybe there should be waivers for smaller banks so they can give out the loans businesses need and help with community development.”

Sam Chandan, founder and chief economist of Chandan Economics and associate faculty member at The Wharton School of the University of Pennsylvania, emphasized the importance of the narrative currently happening among commercial real estate investors, especially when it comes to multifamily homes.

“The narrative is that Millennials love to rent; they prefer the flexibility and proximity to amenities that comes with renting rather than owning,” said Chandan. “However, that fails to take into account that while Millennials will always be Millennials, Millennials will not always be in their twenties. You could ask a 22-year old at any point in history if they want to own a house in the suburbs, move away from urban centers, or own a minivan, etc., and they will say no. But that answer has changed in the past and it will change again, and the multifamily sector needs to develop a narrative that takes that into account.”

The same problem is affecting other commercial markets, such as retail. Online commerce has changed the way commercial retail positions itself and attracts buyers. “While it’s true that you will never be able to get a haircut online, the same cannot be said for buying books or groceries. We cannot assume that because people always shopped at grocery stores that they will not learn and adopt another way.” said Chandan. “The commercial market needs to develop a narrative that evaluates how flexible people are with their shopping habits.”

The National Association of REALTORS®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

Media Contact: Jenny Werwa / 202-383-1193 / Email

WASHINGTON (May 15, 2015) — Officials from the U.S. Department of Veterans Affairs encouraged Realtors® to help debunk misconceptions regarding the VA Home Loan Guaranty Program yesterday at an agency briefing held during the REALTORS® Legislative Meetings & Trade Expo.

The VA home loan guaranty is a military benefit that helps service members, veterans and eligible surviving spouses become homeowners. Since the program was enacted in 1944, as part of the G.I. Bill, the VA has guaranteed more than 21 million home loans.

John Bell, assistant director of loan policy and valuation, thanked Realtors® for their role in the home buying process. “I have been so impressed with being able to work with the National Association of Realtors® and its members on improving our outreach to the community,” he said. “You are the front line of defense when it comes to helping veterans understand this program; without Realtors®, veterans will not come.”

Seth Task, 2015 chair of NAR’s Federal Financing and Housing Policy Committee, said Realtors® are working hard to educate other agents, lenders, and those who served the country about the advantages of the program and how veterans can use them. “Realtors® are proud to help all eligible homebuyers use their VA benefits to meet their housing needs,” he said.

Because VA loans are a benefit for veterans and their families, protections are built into the homebuying process to ensure that any property purchased will be safe, sound and sanitary for occupants. The program’s special conditions mean that closing requirements for VA loans are different from other conventional loans. Realtors® are concerned that the differences may deter sellers from accepting veterans’ offers, especially during bidding wars when a VA loan may seem inconvenient.

“We think every veteran should be able to use a VA loan, and it is frustrating for us when there are confusions or other roadblocks that prevent veterans from getting the home they want,” said Task.

Bell said further education needs to be done. “There are misconceptions in the marketplace about VA loans. People worry they are challenging to close or difficult to underwrite, and that the appraisal process drags on too long, yet the facts show that appraisal and closing times are on par with the rest of the industry,” he said.

Realtors® can also remind lenders to request an appraisal early in the process to make sure a VA certified appraiser is able to value the property in advance of the closing date. If agents feel that a shortage of certified appraisers is slowing down the process, they can call the local VA loan center and request a review of appraiser capacity.

NAR is committed to working with Congress and the VA to provide more flexibility to veteran borrowers when purchasing a home.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1 million members involved in all aspects of the residential and commercial real estate industries.