Last Updated: February 14, 2022

A Warning for Real Estate Buyers from the Fed

Written By: Chris Dailey
dollar bills rolled up into tube shape

The Federal Reserve Bank, as we all know, raises and lowers rates on money at periodic intervals, in order to control inflation, spur the economy, or for other reasons.  Rates have been extremely, even historically, low for a long time now, and we know that that's got to change.  In recent weeks, the Fed has signaled, which is as much of a clue as we will receive, that they plan to raise rates.  To begin with, they just talked about sometime in 2022, but, lately, the speculation is that the first increase could come as early as March. 

Real estate prices, and therefore values, are heavily influenced by interest rates. 

Over the course of a mortgage, the rate will matter more than the last dollars thrown in to seal the transaction.  Low rates allow commercial buyers to purchase more real estate for the same price, and to leverage more of their cash.  This seems like not only a good time to diversify from the stock market, but perhaps the last chance to buy before interest rates go up.  Inflation, so far, seems to be passing through to consumers, so that businesses can spend more money on their properties.  Pent-up demand from the pandemic has left many industries in a great position to grow in 2022, and some have already been taking advantage of that.  

Now is the Time to Buy

What clearer message could we be getting, than that now is the time to buy expanding into a new facility, opening a new plant, or finding a new warehouse for product that is being shipped in or out?  Those who heed this nudge from the Fed will be glad that they got moving early in the year, and profited financially by doing so.

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