Fed needs to take interest rate stand to promote multi-family construction

New York /
May.May 10, 2012 03:30 PM

Conditions are ripe for the construction of new multi-family housing in the United States, yet the rate at which those properties are being started is still well below where it’s been for most of the last 50 years. A Slate columnist blamed this phenomenon on the Federal Reserve’s inability to make a commitment to the direction interest rates will be steered.

There’s little doubt that there’s need for more multi-family housing. Builders are unemployed at an elevated rate, the U.S. population is growing and rents are rising because mortgages for home purchases remain difficult to secure.

Yet developers say they aren’t moving forward with multi-family projects because they can’t obtain a loan. Lenders are hesitant to park large sums of money into low-yield financing for development, as they’re worried interest rates will rise. If the Fed were to say that interest rates would remain low “come hell or high water,” the columnist argues, investors wouldn’t fear sacrificing that liquidity.

Instead, the Fed has said only that it’s unlikely anything will occur that would lift interest rates above their current state — a statement that seems to imply the economic downturn will continue. And that uncertainty generates a high preference for liquid investments. [Slate]


Related Articles

arrow_forward_ios
Clockwise from top left: 162 West 13th Street, 325 Avenue Y in Brooklyn, 1281 Viele Avenue in the Bronx (Credit: Google Maps)
Here’s what the $10M-$30M NYC investment sales market looked like last week
Here’s what the $10M-$30M NYC investment sales market looked like last week
Real Capital Analytics data showed that New York’s multifamily market had a very slow July. (Credit: iStock)
New NYC rent law “beginning to shut down investment”
New NYC rent law “beginning to shut down investment”
Numbers were down across the board (Credit: iStock)
New York’s multifamily market had its slowest first half of the year since 2011
New York’s multifamily market had its slowest first half of the year since 2011
2111 Frederick Douglass Boulevard and 214 West 109th Street, two buildings as part of the portfolio (Photos via Google Maps; StreetEasy)
Black Spruce eyes $700M+ valuation for multifamily portfolio
Black Spruce eyes $700M+ valuation for multifamily portfolio
Paul Fishbein pretended to own properties across the city, pocketing rental assistance checks in the process, authorities said. (Getty)
Landlord imposter pocketed $1.5M in rental assistance: Authorities
Landlord imposter pocketed $1.5M in rental assistance: Authorities
E&M Management Founder Irving Langer. (E&M, Getty)
Multifamily giant Irving Langer pays off defaulted loan after selling properties
Multifamily giant Irving Langer pays off defaulted loan after selling properties
CDC director Dr. Rochelle Walensky (Getty, iStock)
CDC extends national eviction ban through June
CDC extends national eviction ban through June
(iStock/Illustration by Kevin Rebong for The Real Deal)
Investors pile into house-flipping
Investors pile into house-flipping
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...