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Higher for longer is officially back.
Topic Author
3 weeks 19 hours ago #648392
by Duriel Taylor
Higher for longer is officially back. was created by Duriel Taylor
The Federal Reserve raised interest rates by 25 basis points today, its first rate increase since July 2023, bringing the federal funds target range to 3.75% to 4.00%.
The decision was unanimous, with all 12 voting members supporting the increase.
The Fed’s message was direct. Inflation remains elevated, economic activity continues to expand at a solid pace, job gains remain strong and unemployment has changed little.
More importantly, the updated projections indicate that policymakers anticipate one additional 25-basis-point increase before the end of 2026.
For real estate investors, developers and asset managers, this means capital is unlikely to become meaningfully cheaper in the near term.
Borrowing costs will remain elevated. Refinancing pressure will continue. Cap-rate assumptions must remain disciplined. Development projects will require stronger equity positions, more conservative underwriting and clearer exit strategies.
However, periods of tighter monetary policy also create opportunity. Well-capitalized investors may benefit from reduced competition, motivated sellers, loan maturities and assets that were originally underwritten in a significantly lower-rate environment.
The market is not closing. It is becoming more selective.
The question is no longer when rates will fall. The question is whether your investment strategy can perform while rates remain higher for longer.
How are you adjusting your real estate strategy following today’s decision?
Follow for weekly commercial real estate, capital markets, and economic insights that help investors and business leaders stay ahead of the market.
The decision was unanimous, with all 12 voting members supporting the increase.
The Fed’s message was direct. Inflation remains elevated, economic activity continues to expand at a solid pace, job gains remain strong and unemployment has changed little.
More importantly, the updated projections indicate that policymakers anticipate one additional 25-basis-point increase before the end of 2026.
For real estate investors, developers and asset managers, this means capital is unlikely to become meaningfully cheaper in the near term.
Borrowing costs will remain elevated. Refinancing pressure will continue. Cap-rate assumptions must remain disciplined. Development projects will require stronger equity positions, more conservative underwriting and clearer exit strategies.
However, periods of tighter monetary policy also create opportunity. Well-capitalized investors may benefit from reduced competition, motivated sellers, loan maturities and assets that were originally underwritten in a significantly lower-rate environment.
The market is not closing. It is becoming more selective.
The question is no longer when rates will fall. The question is whether your investment strategy can perform while rates remain higher for longer.
How are you adjusting your real estate strategy following today’s decision?
Follow for weekly commercial real estate, capital markets, and economic insights that help investors and business leaders stay ahead of the market.
3 weeks 19 hours ago #648392
by Duriel Taylor
