January 6, 2010
Robert Knakal has written an article for the Observer detailing the various mechanisms the FED has at its disposal to address liquidity in the market. Just reading the article gives me a headache. Not because it’s confusing, but because there are just so many variables now in play that it becomes nearly impossible to figure out what is going to happen and when. Here’s a sample from the article:
What happens after property values bottom out? Will property values bounce along this bottom for a while? Will values bounce but trend upward or trend downward? The answers to these questions are dependent upon a battle that will take place among the following factors: the speed and extent of inflation; the de-leveraging process; the massive amount of capital on the sidelines; job growth; the state of fundamentals; the Fed’s monetary policy (and how it sequences its exit); and good old-fashion supply and demand. We firmly believe that 2009’s low volume of sales was more a function of constrained supply rather than a lack of demand, which remained healthy.
Despite all this uncertainty, there is a lot of money still waiting to come in off the sidelines. In fact, we’ve seen an uptick in activity over the past quarter and there are numerous office assets in the $20-40M range in the SF Bay Area currently under contract.
Most of the money though will flow to the core markets, leaving the secondary and tertiary markets to suffer longer and harder as yields will rise in these “less-than-core” markets.
Anyhow, read the whole article, it’s a fairly good read…
[via The Observer]
- Using The MIT TBI Supply and Demand Index To Time The Market
- Investors Jostling for FDIC Assets
- Prudential U.S. Quarterly Report
- Deloitte’s Theory on CRE: Could Be, May Be, and Expected To
- S&P: Worst Yet To Come For Commercial Real Estate Loans