Q1 2023 has seen its share of economic-related news, from bank failures to continued increases in the Effective Federal Fund Rates (EFFR). During the May 10, 2023 edition of a webcast hosted by Walker & Dunlop Chairman and CEO Willy Walker, a panel of experts discussed the roller-coaster economic situation – and its impact on real estate.
The good news? Issues aren’t as dire as what’s being reported in the media. Aaron Appel, Senior Managing Director at Walker & Dunlop said that while banks have been under pressure recently there is no contagion effect. In fact, he noted that “there are so many different alternative lenders in the market today versus what was there 15 years ago.” He added that while borrowers may not like all available options they do have access to leverage for good projects and assets.
Kris Mikkelsen shared his insights on multifamily markets noting forced selling had not materialized despite initial fears at start of year – instead conversations with sellers suggest holding onto assets if possible during this period instability is best option for them financially speaking. Single family builders were also busy racking up market share gains due to relocations which Ivy Zelman CEO Zelman & Associates pointed out were driven by homeowners moving from higher expense regions into more affordable cities creating “a bit musical chairs going on”.
Despite expectation EFFRs might decline by end year panelists cautioned against too much optimism – companies pulling back capital expenditures could create self fulfilling prophesy leading to troubled economy; plus single family new home supply still lagging behind demand due lack skilled labor availability exacerbated by COVID 19 related retirements making it difficult Fed crack unemployment without harming economy long run according Appel’s assessment .
When asked about Dow Jones Industrial Average Treasury bills predictions Dec 31st ,Appel predicted 3% -3:15 % range with Dow 30k ; Mikkelsen anticipated drop 10% S&P 500 T bills between 3:25%-3:35%. However Zelman took different view suggesting slow bleed rather than giddy hopefulness equity markets anticipate rate cut end year . Her conclusion ? Being pragmatic we just might be slogging along for a while . On demand replays webcast available or through podcast series Driven By Insight
