At Colliers, we understand the importance of interconnected data, macroeconomic trends, and anecdotes in real estate decisions. With that in mind, we find the following headwinds developing in the broader economy and real estate capital markets. Here are 10 numbers and storylines that have recently caught our attention.
- The 10-year Treasury rate set a new cyclical high, closing above 4.34% on August 21. With current and former Fed governors broadcasting “higher for longer” rates, investors continue to adjust their expectations.
- Freddie Mac reported that 30-year fixed mortgages hit the highest average rate since 2001, at 7.23%, on August 24.
- Outstanding credit card debt totaled $1.03 trillion in June, the highest ever, per the New York Federal Reserve. Meanwhile, new credit card and auto loan delinquencies surpassed pre-COVID levels in Q2.
- Bankrate reported that the average credit card APR of 20.63% is also a new all-time high, while LendingTree pegged the average even higher, at 24.37%. Macy’s customers fell behind on payments at a faster pace in June and July, it said in its recent earnings report.
- Moody’s and S&P have recently downgraded several regional banks due to higher interest rates and CRE exposure and have cautioned that larger banks could be next. Concurrently, analysts have downgraded several REITs.
- MSCI data showed that investment sales volume was the lowest since May 2020, down more than 50% month-over-month from June to July. This comes after multiple months of volume growth.
- Preqin data showed a record amount of uninvested capital meant to target North American real estate in August, $270.4 billion, as investors struggled to make their return hurdles.
- Ernst & Young reported that Q2 venture capital funding declined 34% from Q1, to $29.4 billion, a new cyclical low. Meanwhile, IPO proceeds in the first half of the year doubled those of 2022, thanks to a large deal in May. Overall, the number of IPOs offered increased by 24%.
- WeWork, formerly one of the fastest-growing occupiers in the nation, has substantial doubt about its solvency, causing the NYSE to deslit trading in the firm’s warrants.
- The Atlanta Fed’s GDPNow, an aggregated forecast of 13 GDP subcomponent models, estimated Q3 GDP of 5.6% as of September 1. Conversely, the range of forecasts from Blue Chip Economics is sub-1%–2.5%.
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