The Federal Reserve’s mixed messaging, a music icon’s embrace of commercial real estate and a new record level of homelessness. From the wild and wooly world of real estate, here are the hits and misses for the week of Dec. 11-15.
Hit: Keeping a Finger on the Pause Button. To no one’s surprise, the Federal Reserve decided not to close 2023 with a rate hike. Chairman Jerome Powell also dropped the hint that the central bank might be pivoting to a new regimen of rate cuts, telling reporters at a press conference: “The question of when it will become appropriate to begin dialing back the amount of policy restraint…begins to come into view, and is clearly a topic of discussion out in the world and also a discussion for us at our meeting today.”
Miss: Correcting the Chairman. While Powell did not specifically promise rate cuts in 2024, New York Federal Reserve President John Williams offered a contradictory message that there were no plans for cuts in the near future. “We aren’t really talking about rate cuts right now,” said Williams in a CNBC interview. “We’re very focused on the question in front of us, which as Chair Powell said…is, have you gotten monetary policy to a sufficiently restrictive stance?” Maybe it would help if the Fed’s leadership could get their messaging straight?
Hit: Star Power on Display. If the commercial real estate industry needs a spokesperson, I’d nominate Dolly Parton. The music icon’s Dollywood Company acquired an office and retail building in downtown Nashville for an undisclosed sum and is reportedly planning to reposition it as a hotel. “Since the pandemic, commercial real estate is becoming an opportunity,” Parton said in a statement. “I strongly believe in the future of Nashville and feel this is a great investment.” Hey, if Dolly Parton tells us to invest in commercial real estate, then what are we waiting for?
Hit: Progress, Sort Of. Apartment hunters in Manhattan trying to find a place to live might be glad to know that the median rent dropped year-over-year for the first time in 27 months. November’s median of $4,000 is down 4.6% from October and down 2.3% November 2022. But this is only a very small step to a market where affordability gets a chance to take root – lest we forget, Manhattan’s median rents hit a record high of $4,400 in August.
Miss: The Crisis We’re Not Talking About. Today’s Wall Street Journal had an article that said the level of homeless people in the U.S. hit a new peak with more than 653,000 people without shelter, up 12% from last year. The U.S. Department of Housing and Urban Development blamed this on rising housing costs, evaporating opportunities for affordable housing, the after effects of the opioid epidemic and the expiration of pandemic-era financial aid that helped keep people in their homes. In some cities, the wave of illegal immigrants being placed in municipal shelters made the situation more acute. Sadly, neither President Biden nor the candidates trying to get his job are talking about this crisis, which could easily metastasize further in 2024.
Phil Hall is editor of Weekly Real Estate News. He can be reached at [email protected].
Photo courtesy of Dolly Parton’s Facebook page