‘A Sea Change In Optimism’: Real Estate Reacts To First Interest Rate Cut In 4 Years
From sheer jubilation to fears that a 50-basis-point cut in interest rates could portend a weakening economy, real estate had a lot to say about the Federal Reserve's latest move.
Press releases and tweets flew fast and furious in the wake of the Federal Open Market Committee’s massively anticipated decision Wednesday.
Ahead of the policy action, capital markets had largely expected a 25-bps cut, a measure that might have had more impact on dealmakers' mindsets than on their bottom lines. A more sizable cut from the Fed could throw more weight behind growing CRE hopes that its worst days are behind it.
Richard Barkham, global chief economist at CBRE, said at a virtual media briefing that real estate is seeing the benefits of a “soft landing” playing out in the economy, with very little impact so far from a slowing labor market.
A 50-bps cut will “be welcomed” by the real estate community, he said.
“In the last couple of months — and it will be consolidated and built on by this cut in interest rates — there's been a sea change in optimism in real estate capital markets, which have seen very low levels of transactions and have seen a fall in real estate values over the last 36 months,” Barkham said.
Bisnow rounded up industry reactions to the news from over a dozen people across various sectors of CRE:
This cut will help alleviate the biting restriction of today's high interest rates, signaling the beginning of a turnaround in asset pricing while also providing a cyclical boost to real estate investment and development. Both residential and commercial sectors will feel the positive effects of these adjustments, specifically with multifamily investments experiencing improved financing options. However, a more meaningful impact on construction starts will require further rate cuts, especially given supply challenges.
— Cymbal DLT Chairman Asi Cymbal
