Marcus & Millichap

Index Rates

Capital Alert

September 10, 2019

A Recession is Not a Foregone Conclusion

It seems like you see the word “recession” everywhere these days. Recent economic news has certainly been troubling, especially with the U.S. trade war with China and the inversion of the yield curve. And according to the New York Times, Google searches for the word “recession” recently surged to the highest levels in a decade. But far from providing the full picture, these indicators are factors in what is known as Negativity Bias Theory, an evolutionary phenomenon wherein we focus on and singularly prioritize threatening and alarming signals.

In reality, while it is important to keep these recession risk factors in mind, there are also plenty of positive economic indicators at the moment. After all, unemployment has hovered around 4 percent for over a year; corporate profits are elevated and positive; it’s a job-seeker market, with more job openings than people looking for work; both job and wage growth remain positive; consumer spending continues to rise; and consumer balance sheets are stronger than historical averages.

Whether you tend to be more optimistic or more pessimistic, it’s important to remain proactive in managing your investments.

Focus on your goals, and make sure each part of your portfolio aligns with those goals. The gap between capitalization rates and US Treasuries has widened significantly of late, creating a window of opportunity for investors to buy properties that might not have made economic sense just three months ago. There is also the opportunity to take advantage of very attractive long-term debt options and position your portfolio for long-term success. And finally, be sure to stay informed and pay attention to a wide array of economic indicators, not just a single data point making headlines.

Index Rates

Benchmark Rates and Derivative Products
Freddie Mac SBL Rates

Freddie Mac Conventional Rates
Fannie Mae Small Balance Rates

Fannie Mae Conventional Rates
Life Companies & CMBS Indicative Rates

Recent Transactions

Westminster, CA
3.425% Fixed
10-yrs I.O.
10-yr term/30-yr amort.

Student Housing
Memphis, TN
4.35% Fixed
5-yrs I.O.
10-yr term/30-yr amort.

Multifamily and Retail
New York, NY
4.125% Fixed
2 yrs I.O.
5-yr term with extension option/30-yr amort.

O'Fallon, MO
3.46% Fixed
8-yr term/25-yr amort.

Seniors Housing
Coeur D’Alene, ID
4.62% Fixed
10-yr term/30-yr amort.

Elizabeth City, NC
4.65% Fixed
10-yr term/15-yr amort.