Ira J Gumberg Discusses Key Tenant Retention Approaches and Considerations For 2025
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The Real Impact of Interest Rate Volatility on Property Valuations [Ira J Gumberg]
Interest rates have always played a pivotal role in real estate , but their impact becomes sharper and more complex in times of volatility. Property valuations, both residential and commercial, are especially sensitive to interest rate fluctuations, and recent market trends have put this dynamic under a microscope. The cost of borrowing is crucial to this relationship. Mortgage rates increase with interest rates, making it more costly for purchasers to finance a home. As a result, buyer pools are reduced, purchasing power is diminished, and prices are under pressure to decline. Lower borrowing costs, on the other hand, can boost demand and support or even inflate valuations as interest rates fall. Volatility presents a particular challenge. Unlike steady increases or decreases, volatility creates uncertainty. Buyers and investors are sometimes hesitant to enter long-term contracts when the cost of financing is unknown. This uncertainty could lead to slower transaction volumes, lo...