QE3 could galvanize commercial RE investing

New York /
Sep.September 21, 2012 03:00 PM

The Federal Reserve’s third round of quantitative easing – its plan to buy $40 billion of mortgage-backed securities from Fannie Mae and Freddie Mac per month – may push real estate investors out of the residential market and into riskier commercial projects, according to CNBC. During QE2 back in 2010, yields on riskier equities and high-yield bonds, like commercial mortgage-backed securities doubled as the Fed purchased long-term U.S. Treasury bonds.

“If history is a guide, we could expect additional near-term price gains for riskier assets, at least for a few more months,” John O’Callahan of CoStar Group, a commercial real estate information company, said.

However, a major differences between now and 2010 are that commercial real estate prices in solid markets are already stronger than they were during the previous two rounds of quantitative easing and that interest rates are low.

“If QE3 did spur an increase in equity values, investors and companies would be in a stronger financial position, and this could spur a bit of a wealth effect,” according to Ryan Severino, senior economist at Reis, said. And more wealth in the market could lead to business expansion, which would positively affect commercial real estate. [CNBC]Christopher Cameron


Related Articles

arrow_forward_ios
Ascena owns Ann Taylor, Lane Bryant, Lou & Grey and Cacique. (Getty)
Ascena restructuring approved post-bankruptcy
Ascena restructuring approved post-bankruptcy
Apollo Global Management will take over craft retailer Michaels in a deal that values the company at $3.3 billion. (Wikipedia Commons, iStock)
Craft retailer Michaels to go private in $5B deal
Craft retailer Michaels to go private in $5B deal
 JLL CEO of capital markets Richard Bloxam and Roofstock CEO Gary Beasley (JLL, Roofstock, iStock)
JLL gets in rental home business
JLL gets in rental home business
Mack-Cali Realty CEO Mahbod Nia and MaryAnne Gilmartin (Photos via Mack-Cali Realty)
Mack-Cali Realty names Mahbod Nia as CEO
Mack-Cali Realty names Mahbod Nia as CEO
The comedy club argues that if SNL can operate, then they should be allowed to operate too. (Getty)
Manhattan comedy club sues Cuomo over pandemic closures
Manhattan comedy club sues Cuomo over pandemic closures
(iStock)
These were Manhattan’s best office submarkets in Q4
These were Manhattan’s best office submarkets in Q4
(iStock/Illustration by Alexis Manrodt for The Real Deal)
Order up: Real estate investors line up to buy drive-throughs
Order up: Real estate investors line up to buy drive-throughs
Mayor Bill de Blasio (Getty, iStock)
NYC to revive $17B in public construction projects
NYC to revive $17B in public construction projects
arrow_forward_ios

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

Loading...