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Rates

I have been very erratic  in posting any new blog comments.  Here is why: the market for selling buildings is on fire.  Interest rates remain at all time lows, buildings are full (despite record new supply), and alternative investments continue to look super risky.  This keeps a broker busy. 

I was recently asked by a buyer if I thought there is a bubble in pricing today.  Maybe, but not compared with alternatives.  I think this has been, and continues to be, due to the extremely low cost of debt. About  two years ago I finally stopped saying rates are going up soon.  Still, even if rates do go up which alternative investment would one prefer given the way the Dow has been jumping up and down now in a near regular pattern with no apparent cause. Scary. 

So this is interesting:  if rates go up it will be due to an improved economy (according to the Fed) so if the economy has improved how will that negatively impact real estate?  This should mean that regardless of the pricing/values on income property today it should provide long term, stable, and reliable income regardless of what happens to rates.  In other words, higher rates will actually mean things are good.  Not sure when they come but I am not sure there is much to fear.