Is Now the Right Time to Invest in Commercial Real Estate

Video Transcription

All right. Welcome everybody. Paul Esajian here. I, uh, got good responses when I shared a little bit of current market information and data. Um, so I’m doing that again. Uh, quick 15 minute or so share on financial news as, as it’s related to our real estate industry sector. And then, um, with some specifics on the commercial real estate, uh, but all tied into, of course, some shares on the Federal Reserve of previous meeting last week, the future meeting coming up.

So let’s just jump right into it and kind of topic today is framing to ourselves right now. This is an internal question. I know we’ve been asking personally here at uh, our office. You know, when is the right time for us to be more aggressive to start buying properties right in our commercial real estate?

And, uh, you know, our residential real estate business is not as sensitive to timing because you know your local market, you know your local neighborhoods. It’s just buying something that you can improve. Commercial real estate has a few more macroeconomic components to pay attention to. So, we’ve been asking yourself, is now the right time to invest in commercial real estate?

Let’s look at the Fed data, the dates that have happened and meetings and the dates that are coming up that we’re focused on. And talk a little bit about the interpretation of those dates. Let’s talk first, uh, showed this, I believe on some previous TR trainings and shares. The Federal Reserve has.

Raised rates since February of 2022 for a total so far of 10 times. So, we went from a near zero Federal Reserve interest rate, right, uh, in the federal funds target rate in which the banks, uh, overnight funds borrow and. Exchange money using that rate. And we went from basically zero to where we’re at today, which is a range five and a half, 5% to 5.25%.

As of the, uh, last meeting that just happened in May of 2023, the Fed raised rates a a quarter of a basin. Uh, basis point or 0.25%. So that’s what we’ve been all watching. That’s what has been affecting transactions, the market deal flow, pricing, lending, financing, capital markets, all that good stuff.

That’s what’s happened. So, let’s talk a little bit here. The major takeaway from the Med Fed, the, the major takeaway from the May Fed meeting that just occurred. When the Federal Reserve met and decided, are they going to, you know, there’s three choices. When the Fed meets in their meetings, do they raise rates?

Do they pause or not change the rate, you know, do a meeting and say, we’re not changing the rate, or do they cut rates? Right. There are three choices it, the last meeting here in May, 2023, the Fed went ahead and raised rates by quarter point. However, this is the big takeaway that if I had one thing to share with you in a short time period, and that’s what this is all about, right?

What you need to know in a short time period is this, the formal fed meeting and the statement they released, they eliminated the phrase. They eliminated the phrase on their formal statement that they released to, uh, the public and the media. They eliminated. And I quote, the committee anticipates that some additional policy firming may be appropriate.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top