A well-known executive in the real estate investment business says that after years of strong price increases, the US real estate market is going to slow down as buyers deal with the effects of inflation.
Property sale prices have fallen between 5% and 10% in some locations, according to Daniel Steinbach, chief investment officer of global real estate company Hines. The tendency is affecting both the US and European markets.
In an interview with Bloomberg, Steinbach remarked, “I think we’re in for a rough few months.” “This year is going to be choppy water.”
In recent years, property values have hit new highs as interest rates have stayed low and central banks, notably the Federal Reserve, have maintained a lax monetary policy.
But rising inflation has made it harder for potential buyers to get financing. This has caused central banks to tighten their policies, which has led to higher interest rates and more expensive loans.
As the economy worsens, Steinbach said his company is experiencing a drop in demand for rental homes and office space.
“Higher inflation is without a doubt making its way into private real estate,” Steinbach added. “The bidding pools are becoming thinner.”
According to its website, Hines manages more than $90 billion in investment assets and has a presence in 28 countries.
A request for more information from the firm was not immediately returned.
A poll by the Mortgage Bankers Association showed that demand for mortgages fell to its lowest level in 22 years during the week ending June 3. This was because interest rates went up and there weren’t as many mortgages available. This was reported by The Post earlier this month.
According to Freddie Mac, the average 30-year fixed-rate mortgage rate in May was 5.23 percent, up from 3.45 percent in January.
According to the May Consumer Price Index, the cost of housing increased by 5.5 percent over the previous year; a key inflation indicator. Since February 1991, this was the fastest yearly growth rate.