Industry unflustered by latest interest rate hike.The Fed's latest interest rate hike barely registered on the real estate radar, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. industry experts. On Tuesday, September 21, the Federal Open Market Committee raised short-term interest rates Short-term interest rates Interest rates on loan contracts-or debt instruments such as Treasury bills, bank certificates of deposit or commerical paper-having maturities of less than one year. Often called money market rates. yet again from 1.5% to 1.75%, an increase that hasn't made the real estate market even flinch. The third such 25 basis point rise since June, and part of an ongoing series of raises that many fear will begin to chip away at skyrocketing real estate values, has been accompanied somewhat unexpectedly by a slowly sinking 10-year Treasury yield, the rate that real estate loans are typically priced from. Many industry experts have consequently revised predictions of a dwindling dwin·dle v. dwin·dled, dwin·dling, dwin·dles v.intr. To become gradually less until little remains. v.tr. To cause to dwindle. See Synonyms at decrease. boom and expect peak real estate values to stretch on and even possibly continue to increase in the months ahead, prolonging a recent heightened period of market activity. "It would appear as though the current rally has legs," said Gary Gabriel, executive director of Cushman & Wakefield. "It makes investor's exits look more probable and it creates an expectation that prices can stay stable and perhaps go up somewhat." Although estimates put third quarter economic growth at around 3%, down from 4% first quarter gains, Greenspan has dubbed the economy's recent sputtering A popular method for adhering thin films onto a substrate. Sputtering is done by bombarding a target material with a charged gas (typically argon) which releases atoms in the target that coats the nearby substrate. It all takes place inside a magnetron vacuum chamber under low pressure. as a soft patch A quick fix to machine language currently in memory that only lasts for the current session. , implying its transience. "I just don't know Don't know (DK, DKed) "Don't know the trade." A Street expression used whenever one party lacks knowledge of a trade or receives conflicting instructions from the other party. how big the patch is," Gabriel said. "A ten trillion dollar economy doesn't move on a dime." August saw a pickup in job creation, which is expected to have a positive effect on tenancy. And while rents have reached a plateau, building values have seemingly been impervious to shrinking cap rates. "Buildings have had major vacancies, but real estate has still been selling at all time highs," said Jeffrey B. Steiner, a partner with Brown Raysman Millstein Felder & Steiner LLP LLP - Lower Layer Protocol , and chairman of the firm's real estate and business and finance departments. "The reason is, a lot of investors have seen opportunities to turn buildings around, to improve them and increase tenancy and rents. People looked at the vacancy as having an upside." The Fed meets twice more before the end of the year, on November 10 and December 14, and the consensus indicates that rates will continue to climb, probably to either 2% or 2.25% before the start of 2005. "Even at year's end, rates will still be at good levels historically speaking," Steiner said. |
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