According to global real estate advisor CBRE, the impact on U.S. commercial real estate investment activity from the recent rise in the 10-year Treasury will be minimal in the short-term.
Spencer Levy, CBRE's Senior Economic Advisor and Head of Research, the Americas, commented, "Geographic markets with the greatest rent growth will be most resilient in the face of rising interest rates. Industrial, with the strongest investor demand, will be generally more resilient than other asset types. Retail showed the greatest weakness in cap rates in 2017, even before interest rates began to rise. Recent interest rate increases may cause cap rate expansion in retail to accelerate for secondary/weaker assets."
Levy further stated, "Secular factors, particularly the strength of equity capital flows, have upended the historic relationship between interest rates and cap rates. For foreign capital flows, the fall in the dollar is a big offset to rising interest rates."
U.S. builder confidence in the single-family 55+ housing market remained strong in the fourth quarter of 2017 with a reading of 71, up 12 points from the previous quarter. This is the highest reading since the inception of the index in 2008.
According to global real estate consultant CBRE, the enactment of comprehensive tax reform in the U.S. contributed to strong investor sentiment and a favorable commercial real estate lending environment at the end of 2017.
According to a Zillow, U.S. homebuyers paid more than the asking price in nearly one quarter (24 percent) of U.S. home sales in 2017, netting sellers an additional $7,000 each. Five years ago, 17.8 percent of final sale prices were higher than the asking price.