The economy and the residential real estate markets have started to gain their footing, but the commercial real estate market is still struggling. This is keeping the Federal Reserve from raising interest rates in the near term.
The suffering of the commercial real estate is going to be a boon to the residential markets. Low interest rates and the confidence that the market is forming a strong bottom. Low interest rates will only help the bottom to form and consumers to regain confidence they will not lose money when buying a new home.
If nonresidential real estate remains in the doldrums, the Fed may be forced to leave emergency-lending programs in place and keep its benchmark interest rate close to zero for longer than some investors expect, given positive signs elsewhere in the economy.
Commercial property is “certainly going to be a significant drag” on growth, said Dean Maki, a former Fed researcher who is now chief U.S. economist in New York at Barclays Capital Inc., the investment-banking division of London-based Barclays Plc. “The bigger risk from it would be if it causes unexpected losses to financial firms that lead to another financial crisis.” via Bloomberg.com.
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Or I have a better idea, how about we stop letting a non-government entity dictate the interest rates for everybody? The Fed has some big problems in its very design fundamentals giving a few people way way too much power.
-Tyler
For those fortunate owners and investors that can find commercial money this might be good news. Reasons for sound cash on cash returns investments make this news more important than ever. Not sure that I agree with the comment that residential real estate is recovering sooner than commercial real estate. Year to year statistics must be viewed to determine long term trends.
They highlight some reason or the other for not raising the interest rates. Actual facts are unknown.
Anyone think this FED dictatorship was part of the problem in the first place?
Well commercial real estate mainly depends on the growth of economy and business environment, and its a total different ball game!