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
Hudson’s Bay Company restructures $846M CMBS loan
Hudson’s Bay Company restructures $846M CMBS loan
Hudson’s Bay Company restructures $846M CMBS loan
Two of the eleven properties under threat of foreclosure (Google Maps)
Mack Real Estate may “strip” club owner of properties
Mack Real Estate may “strip” club owner of properties
270 W Montauk Hwy, Hampton Bays, NY (Loopnet)
Legendary Hampton Bays bar up for sale
Legendary Hampton Bays bar up for sale
Senator Chuck Schumer and 70 Prospect Park West (Google Maps, Getty)
Schumer blasts Brooklyn landlord as NY pols vow to pass good cause eviction
Schumer blasts Brooklyn landlord as NY pols vow to pass good cause eviction
Prologis Chairman and CEO Hamid Moghadam (Getty, Prologis)
Industrial space “effectively sold out” amid leasing frenzy, Prologis says
Industrial space “effectively sold out” amid leasing frenzy, Prologis says
Starwood raises $10B for distressed real estate plays
Starwood raises $10B for distressed real estate plays
Starwood raises $10B for distressed real estate plays
Aulder Capital CEO Jonah Bamberger and 162-164 East 82nd Street (Rosewood Realty Group, Slate Property Group)
Two Upper East Side apartment buildings head to foreclosure sale
Two Upper East Side apartment buildings head to foreclosure sale
Stripes founder Ken Fox and a rendering of 40 10th Avenue (Stripes, Neoscape)
Private equity firm carves out 14K sf at Aurora’s Solar Carve building
Private equity firm carves out 14K sf at Aurora’s Solar Carve building
arrow_forward_ios

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

Loading...