**Walker Webcast Recap: Peter Linneman Returns for Insightful CRE Discussion**
The October 8 edition of the Walker Webcast, dubbed “The Most Insightful Hour in CRE,” featured a return visit from economist Peter Linneman, Principal of Linneman Associates. This marked the 23rd time Linneman joined host Willy Walker, Chairman and CEO of Walker & Dunlop, for one of these in-depth discussions.
Together, they covered a broad range of topics—from the economic fallout of a potential government shutdown to oil prices, job creation, and even a philosophical take on patriotism via a reading of the Declaration of Independence at Independence Hall in Philadelphia.
### A Cloudy Economic Outlook
Linneman opened the conversation by acknowledging a growing pessimism about the current economic climate. “I’m not as optimistic as in the past,” he admitted, citing the lack of reliable data due to the government shutdown as one major factor.
When pressed about how investors should navigate the uncertainty in capital markets, Linneman offered a half-joking suggestion: “If you don’t have anything to do in the next three weeks…” He went on to assure listeners that the Bureau of Labor Statistics and other data sources would eventually resume operations and help guide more informed investment decisions.
### Federal Reserve: Rates, Politics, and Predictions
The discussion naturally turned to monetary policy. Linneman expressed hope that the Federal Reserve might be able to implement one more federal funds rate cut before the end of October, stating, “They can’t pause things forever.”
Looking ahead, he still believes the Fed will make three cuts by the end of 2025. However, he criticized political influence on policy, saying, “I thought they’d cut 50 basis points at the last meeting, but for Trump. They’re basically giving Trump the finger.” According to Linneman, the Fed is reluctant to appear compliant with Donald Trump’s demands, contributing to decision paralysis.
### Housing Market Woes: It’s Not Just About Income
Turning to the housing market, Walker revisited Linneman’s claim of a 3.5 million housing unit shortage in the U.S. Walker challenged this by pointing out that builders are staying within budget and not ramping up production.
Linneman stood by his supply-demand analysis but pointed out that affordability—especially the ability to make a down payment—remains the main roadblock for many would-be buyers.
“Income determines what kind of home you buy, but not whether you can buy at all,” he said. Rising prices, driven by a supply shortage, mean people now have to save longer to afford down payments. Additionally, lifestyle choices among younger generations—frequent dining out, vacations, and convenience services—impact their ability to save, he noted. “These might sound like peanuts, but they add up.”
### Foreign Investment: A Case of Reluctant Choices
Walker asked about foreign investment trends, specifically whether continued purchases of U.S. assets indicate confidence in America’s economy. Linneman responded bluntly: “Foreign investors don’t have confidence in the United States. But they have even less confidence in France, England, Russia, China, and Brazil.”
He compared foreign capital behavior to teenage children: always complaining about their home, but always showing up for dinner nonetheless.
### Market Winners: Office and Industrial
According to Linneman’s quarterly “Linneman Letter,” no market particularly stood out as a CRE investment leader in Q3. However, stronger office markets included Miami, Charleston, and St. Louis, while St. Louis was also among the most promising for industrial investment.
However, Linneman clarified that his references to St. Louis and other cities do not imply blanket confidence across entire metro areas. “The metro has had relatively slow growth and almost no development,” he added, drawing a parallel with Detroit a few years ago. “I didn’t say ‘go everywhere in Detroit,’” he emphasized. “I was saying ‘go somewhere in Detroit’ because no one was building.”
He advised investors to search for areas with economic growth but limited new development. While such conditions might be ideal for owners, they may not always suit developers.
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*Replays of the October 8 Walker Webcast are available on YouTube, Spotify, and Apple. Subscribe to receive weekly invites, replays, and articles from upcoming Walker Webcast episodes.*
