Guidance through the uncertainty
Fortunately, if you’re looking for a commercial real estate broker in Atlanta to represent you we’re here. At The Office Advisors, we understand the market intricacies. With continually rising interest rates it is important to make sure you have an adviser who understands what this means. If you’re on the buying side or the selling side. So you don’t have to waste your time searching around the worldwide Web forThe right representation. Get straight to our website to learn more.
Thankfully, at The Office Advisors, things are different. Each of our advisors is your advisers is an expert in their respective area of practice. Make sure you have proper representation if you are trying to sell or list your property for at least. Having a good commercial real estate broker in Atlanta can be the difference between you losing money or making money.
Rate hikes and inflation
now, if you were unaware some of the reasons the FED has risen interest rates over the past few weeks is to stifle inflation. The bedhead of unanimous decision recently. the federal reserve’s policy-setting committee increased interest rates by 5 percent. Which also is called 50 basis points. Or in layman’s terms half a percentage point. This was the largest increase in interest rates since May of 2000. The reason they did this was to tackle inflation. Inflation has been felt all over the country.
Most people suggest that the reason they’re so much inflation was due to the covid relief payments. Our governments are a print of money and just giving it out. That’s there’s an influx in purchasing power from individuals. Since they weren’t responsible and just started buying things up. When you flood the market with cash this is what can cause inflation. That’s we are in the situation we are now coupled with a supply chain shortage.
Why did they do this?
Some of this was done to set the Linden rates for banks. The target rate is between 70% and 1%. This follows the federal initial increase or hike of 25 basis points when they met earlier in March of 2022. Now the Central Bank discussed cutting on its balance sheet forward Treasury and mortgage-backed securities. The goal is to do this on June 1st of this year. The overall picture of what this means is that the Federal Reserve is trying to take a tightening approach to a very aggressive market. An aggressive monetary stance and decades of inflation have reached a 40-year high.
The chair, Jerome Powell opened his press conference by talking to the American people. He wanted to assure them that the Federal Reserve was there to fight inflation. Mr. Powell understands that the American people are struggling in many different aspects and wants to use the tools necessary in order to come back to this. He also stated that the Fed was known for the ongoing increases and it’ll be where appropriate. Also hinting that we are going to see a few more hikes around the same amount in the next few meetings.
What does the song mean for commercial real estate?
now, if you are a buyer of a commercial real estate asset this means a couple of things. If you have a loan on a commercial property the interest that you are paying towards that loan is now increasing. Meaning analyzing with a commercial real estate broker in Atlanta of your property things look different now. You want to buy for cash flow or depreciation. Now with rising interest rates on your note, you will not be able to afford the same amount. Meaning the monthly payment will be higher than what was initially. Does a property must cash flow at a higher rate in order to cover that spread.
In layman’s terms, it is important to have a commercial real estate broker on your side who can navigate you through this. The overall picture means you must buy a property that is castling at a higher rate. The sellers must recognize the purchasing power is going down. this might be a conversation that many commercial real estate brokers in Atlanta are not willing to have with their property owners. It is important to understand that when people cannot purchase an asset at a high rate due to interest increase. The sale price must come down to meet the market demand.
Sellers are affected as well
As previously stated the sellers of a commercial real estate asset must understand the nuances as well. When the market does not have as much purchasing power with a commercial mortgage understanding must occur. It is important to have a great commercial real estate broker on your side who can get the deal done. Navigation through this increased uncertainty is difficult. We at The Office Advisors do our best to provide you with as much information and market knowledge in order to get the job done. Driving to get your goals met or surpassed is what we do.
Furthermore, trying to sell an asset with a commercial mortgage right now creates a lot more underwriting. If people are aware that there might be more increases on the horizon they are going to be diving deeper into their loan documents now. The purchasing power is going down so they must understand exactly what they are getting in for. Having a good commercial real estate broker in Atlanta on your side is imperative to your success. Contact The Office Advisors so we can help you navigate these uncertain inflation times.
A deeper dive into the Federal reserve’s process
Now the Federal Reserve is doing this as a tightening as it targets the reduction of Treasury Holdings. They’re doing this by reporting 17.5 billion dollars. as well as 30 billion and holding agency securities. They’re doing this in each of the next three months. Increasing the Securities to 35 billion and 60 billion respectively per month thereafter. The balance sheet apparently race almost 9 trillion dollars as the Federal Reserve intervened in markets during the pandemic.
If any business owner or individual paid attention to what the current economic status was this came as no surprise. Many individuals and companies in real estate realize that an increase was only a matter of time. That’s what some of us have been planning. Here at The Office Advisors if we are one of these brokerages. So if you want a smart commercial real estate broker in Atlanta on your side work with us.
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a good read
take some time out of your busy day to read this article. It is a deeper dive into what the Federal Reserve is intending to do. If you do not understand interest rates this is also a great way to Understand.
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