Market NewsReal Estate May 24, 2023

Economic Insights for Real Estate Market by Dr. Marci Rossell – LeadingRE (May/June 2023)

The economic landscape is ever-changing and can have a significant impact on the real estate market. As an affiliate of Leading Real Estate Companies of the World®, Weidel Real Estate is committed to staying ahead of the curve and keeping our clients informed of the latest economic insights. Dr. Marci Rossell, the Chief Economist at LeadingRE, has provided her top five economic insights for the month of May 19 – June 23, 2023.


Debt Ceiling Standoff

As the June 1 debt ceiling deadline approaches, Dr. Rossell identifies different scenarios that could play out. While the likelihood of the U.S. going into default is very low, the debt ceiling standoff could become a legitimate crisis. In the event of a default, the U.S. would stop paying Social Security and the military, and the U.S. would go into default on short-term T-bills used widely by corporate businesses and traders on Wall Street. The good news – Congress is taking this issue seriously and currently working through negotiations with the tight deadline in mind.


Interest Rate Hikes

Dr. Rossell explains that the U.S. hasn’t seen inflation at these levels in forty years, which is pulling the Federal Reserve in two directions – keeping expectations for future inflation under control for the sake of credibility, while battling today’s inflation. Dr. Rossell expects rates to be held where they are until Q4, with the Federal Reserve’s goal to eventually reach 2%. Now that inflation triggers such as supply chain disruptions and stimulus money from the federal government are no longer a factor, we should see a consistent decrease in rates.


Commercial Real Estate Vacancies

Dr. Rossell suggests that the rise in commercial office vacancies during COVID has presented us with the opportunity to convert office vacancies into residential properties where we are seeing shortages. This calls for imagination from public and private partnerships, like city planners, zoning authorities and more, to envision a new purpose for these spaces and make progress towards revitalizing urban centers.


Global Economic Climate

Following the G7 Summit in Japan, we are reminded that the world has deep institutional ties that we depend on for peace, prosperity, trade and more. With that in mind, Dr. Rossell believes the long-term trade prosperity from the “Golden Era” of international liberalization is drawing to a close and expresses concern of a re-emergence of a political and economic divide between East and West. She predicts the U.S. will experience minor ramifications, while China and India’s economies will lose out. We will see small, open economies – those who heavily depend on international trade – struggle with the split of East and West.


Coaching Home Buyers and Sellers

In the current U.S. economic landscape, unemployment rates are low, incomes are strong and interest rate increases have slowed. Dr. Rossell says home buyers and sellers must understand that while mortgage rates and prices are up, the housing market exhibits far more stability compared to other markets and should be looked at as a long-term investment. Dr. Rossell predicts that the current conditions will prevail into the future.

As an affiliate of Leading Real Estate Companies of the World®, Weidel Real Estate is committed to providing exceptional client experiences and staying up-to-date with the latest economic insights to best serve our clients.