The Federal Reserve cut their benchmark interest rate again last week, with mixed reviews depending on your perspective. Scott Horsely of NPR reports that the past three rate cuts have contributed to a modest housing rebound, but that business investment is still faltering and is worrying central bankers.
Lidia Dinkova of Globe St reports that although lower rates are generally good for real estate and investors who are refinancing, it will likely lead to less new construction according to industry experts.
Nick Timiraos of Realtor.com picked up on the interest rate news by noting that “business spending contracted for the second straight quarter, offset by healthy consumer spending and modest improvement in the rate-sensitive housing sector.” The Fed did, however, signal in their release that in the future there is “a potentially higher bar for rate reductions.”
For multifamily investors, Keith Larsen of The Real Deal reports that “lowering interest rates makes other asset classes such as bonds less attractive, which has caused investors to turn to higher-income producing assets like real estate, specifically multifamily.” Larsen also quotes Ronald Dickerman, founder and president of New York-based Madison International Realty, as commenting that “low interest rates are the great subsidy in the real estate business.”
Source: Stessa.com, 11/7/19
2020 Real Estate Predictions