I have noticed how Equity Investors are pulling back on the Commercial sector as the return expectation is fading. This is all the result of higher interest rates and of course the concern of potential recession.
This assessment is sadly spot on, as my business is mostly residential, with some Commercial land, I focus not only on what is going on in the Residential Real Estate Market, but what goes on in the various commercial real estate activities as well.
Well, what I have noticed is that lenders are more conservative when it comes to commercial deals. Generally speaking, the traditional real estate debt sources, such as banks and life insurance companies have decreased the leverage due to rising in interest rates and softening of economic conditions.
This should clearly be a concern to all, as construction costs continue to increase across all markets, this in turn has resect expectations and investments strategies.
This will spill over to the Residential side of Real Estate as well... There is a warning to all investors that are willing to lend on real estate, that returns will be much lower than previously. This is all due to the higher cost of debt, pricing and let's be clear the real estate reports are trailing by two to three months behind unless you ask a local real estate agent. So, with today's speech from the Fed Chairman should send a warning to all.
Get ready to put on your seatbelts, my take is there will be soon an exodus of Real Estate Agents from the profession. In case you did not remember in 2008 we lost about 35% of all agents. Only the seasoned & knowledgeable ones will survive.
The good news is serious buyers and sellers will benefit immensely if they step into the market now before interest rates continue to climb.
Hate to remind you, but my father bought a home in the 1970's when interest rates were in the teens. He took too long to pull the trigger and wished he did a year before.... bottom line is he lived happily in his home as the rates climbed and his mortgage was the same and he kept reducing his loan and increasing the value of his home.
Wishing you a safe and healthy life and I look forward to your comments. If you are looking for a knowledgeable, focused and goal-oriented Realtor in the Beverly Hills area who will help you achieve your Real Estate goals, please reach out to me directly! If you are looking for a pet friendly Beverly Hills Realtor who can handle and sell the most difficult properties that no one else could, please reach out to me directly!! If you are considering buying or selling a home, a luxury home, luxury investment real estate, luxury vacation homes, or luxury beach properties in Southern California, Los Angeles, Century City, Westwood, West Hollywood, Beverly Hills, Marina Del Rey, Venice or Malibu, feel free to contact me at 310.486.1002 ( m) homes@endrebarath.com or visit one of my websites at https://www.endrebarath.com I contribute a portion of my commission to local animal rescue organizations. Endre Barath, Jr. Realtor at Berkshire Hathaway HomeServices California Properties DRE#01238708
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