Drunk Real Estate 107. 4 Fed Rate Cuts? The CRE Market Shocker Ahead
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Aug 14, 2025 The potential for four Fed interest rate cuts is stirring up excitement in the commercial real estate sector. The hosts dive into how these cuts could reshape investor confidence and property values. They also tackle the implications of rising delinquency rates and emphasize the unique challenges facing various real estate asset classes. With a mix of personal anecdotes and expert insights, they explore the delicate balance between opportunity and risk in this evolving market landscape.
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Market Priced A September Cut, But Core Worries Linger
- The market now prices a high probability of a September Fed cut after cooler headline CPI and soft jobs data.
- Deeper measures (core and super-core) show services and wage-driven inflation remain sticky.
10-Year Moves Reflect Economy, Not Fed Levers
- The 10-year and Fed funds often move together because both react to the same economic signals, not because one directly controls the other.
- Investors drive the long end down when they expect a softer economy, which then pressures Fed policy expectations.
Defaults Mark The Start Of A Market Reset
- Rising commercial defaults and delinquencies signal a cyclical trough and spark the start of a market reset.
- Even with Fed easing beginning, defaults will continue and values must fully reset before recovery accelerates.