Could Fed’s Interest Rate Hike Fuel A Real Estate Surge?

Could Fed’s Interest Rate Hike Fuel A Real Estate Surge?

High numbers of people in Arizona and across the rest of the country — and, indeed, across the entire globe — paying attention to economic matters and financial markets were waiting with bated breath Wednesday afternoon for scheduled comments from Federal Reserve Board Chairwoman Janet Yellen.

Yellen did speak, and what she had to say resulted in an immediate upward spiraling of stock markets around the world and myriad laudatory comments from economists and other commentators who believe that the chairwoman’s organization acted appropriately.

What the fed did, as noted in a representative article in USA Today, was to raise the U.S. benchmark borrowing rate by a small quarter-percentage point. At the same time, Yellen assured Wall Street executives, investors, borrowers and just about everyone else by stating that further upward interest rate ticks over the next few years would be modest and manageable. Yellen referred to “only gradual increases.”

For obvious reasons, such news brought immediate response virtually everywhere, including in Arizona, where multiple financial commentators weighed in on the possible nexus between the fed’s move and the local real estate market.

In an article appearing in the Phoenix Business Journal, one banking principal called the Fed’s action “a psychological plus.” The paper stated that the board’s decision “could be good news for Arizona and its real estate market.”

The reason: Much economic-related uncertainty was removed by the Fed’s announcement, which was predicated on a belief that the American economy is on a steadily growing and sustainable course.

In short, many people will likely grow increasingly comfortable about prospective buying decisions, with their sense of urgency regarding major purchases — like real estate — increasing commensurate with the knowledge that rates will be rising over time.

“[A] lot of people will think that with the rate increasing, it might be time to make the big purchases,” says one investment expert.

Call Cook & Price, PLC today at 480-407-4440 or email us through this website.

2017-09-28T05:44:52-07:00 December 18th, 2015|Categories: Commercial Real Estate|Tags: |

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