Real Estate Agent Magazine Commercial Multifamily’s Significant Role in Managing Interest Rates

Multifamily’s Significant Role in Managing Interest Rates

Economists anticipate an easing from the Federal Reserve within four to six months as government data becomes aligned with real-time information.

Matt Vance, senior director and senior economist with CBRE, explained at NAR NXT The REALTOR(r) Experience(link is external), Anaheim California that multifamily/rental market is responsible for 34% of headline inflation and 43% of core inflation – so the sector plays a central role in setting any expectations about what Federal Reserve may do. “[This sector is] indispensable” said Vance during a presentation at Commercial Economic Issues & Trends Forum held November 15, 2013.

Vance shared the stage with NAR Chief Economist Lawrence Yun and they both agreed that the Federal Reserve will begin cutting their federal funds rate beginning in 2024 – when data catch up with reality of slowing rent growth. “[Bureau of Labor Statistics] states rent growth peaked in March this year whereas reality suggests it did so much sooner – this has led us to expect core inflation to diminish for some time now.

Core inflation, which excludes food and energy costs, is one of the primary measures used by the Federal Reserve to assess whether inflation remains an issue. These charts compare CPI inflation overall with core CPI inflation. CBRE provides its analysis on how inflation would look using real-time data from BLS instead.

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