LOS ANGELES—"This is probably the most confusing time we have had." So said Hessam Nadji, president and CEO of Marcus & Millichap, who is a widely regarded top expert in research and investment trend forecasting. During his keynote presentation at the GlobeSt. APARTMENT conference here last week, Nadji provided his analysis of where the market is heading and the long-range factors to consider, discussed the yield curve "uninversion" and more.

According to Nadji's economic annual check-up, since 2007, we have increased in population, with more households forming than in 2007 and have more job openings today, actually exceeding the number of people looking for work. "That is an incredible testament to the economy and its expansion," he said.

What is undervalued in all the analysis and forecasting that goes on is the fact that we are an aging population, explained Nadji. He pointed out that 10,000 baby boomers turn 65 every day. "We are the only economy where we are also adding 12,000 people turning 21 every day. We have an amazing demographic wave at both ends of the spectrum which is driving this economy."

In term of concerns, he did have a few more than usual. He discussed concerns of the yield curve "uninversion" noting that it is a gauge of fear since seven of the last nine inversions had a recession within 16 months. Having said that, he said there were a few unforced errors that threw things off balance such as an aggressive Fed policy that over-shot inflation, he said. "We now have to catch up."

Trade was another fear factor he touched on that is "creeping into our business." And while he did have more concerning slides than he did two years ago at the APARTMENTS conference, the strengths in the market are hard to ignore, he said.

"We have a housing market that is undersupplied by 1.7 million units in comparison to household formation," he said, adding that housing was the major cause of the last major crash because of predominantly over lending within housing, but housing is now one of the most stable pillars of the economy.

"Think about how many new units we have added to this marketplace. Vacancies are still around 4% as a whole…what an incredible combination of supply and demand."

According to Nadji, assuming trade wars are resolved, the next recession should be "normal."

Instant Insights /

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