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| John Oharenko |
The
Fed's target of two percent annual growth now exceeds three
percent. However, the Fed states that inflation pressures rank as a
temporary concern.
"Generally
speaking, inflationary fears traditionally move more capital into hard assets,
with real properties emerging as one of the top categories," states John
Oharenko, Director of The Real Estate Capital Institute's®.
Mortgage rates barely changed. Since late May, overall benchmark rates fluctuated about twenty basis points and dropping about fifteen basis points by the end of the month. The five and ten-year treasuries steadily maintain a sixty-basis-point spread.
Even as rates stay
consistent, demand continues unabated for realty assets. The realty
capital markets gain from inflation fears as the property investment sector is
seen as one of the best inflation hedges.
Nearly all
asset categories with reliable cash flows enjoy favorable pricing, especially
as the pandemic recovery brings more need for goods and services
(travel-oriented projects.)
Many examples
reflect rising values during the past years. Home prices nationally increased
about twenty percent over the past year.
The lodging sector
also shares pricing appreciation, although the growth rates are erratic,
depending upon tourism vs. business travel.
The
laggards, offices, and overbuilt retail properties, reflect
unpredictable volatility. Yet, many see these sectors as selective
opportunity plays, driven by specific circumstances.
The Real Estate Capital Institute® is a volunteer-based research organization that tracks realty rates data for debt and equity yields. The Institute posts daily and historical benchmark rates, including treasuries, bank prime, and LIBOR.
CONTACT:
The Real Estate Capital Institute®
John Oharenko
Executive
Director
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