Best Financial Advisors in Venice, FL

Extend and Pretend: Part Deux by Timothy J. Videnka, CFA, CFP® “Trees don’t grow to the sky” – German Proverb As interest rates have risen over the course of the last 24 months and the likelihood of interest rate cuts in 2024 has decreased considerably, one of the more interest rate sensitive sectors of the economy has been showing signs of stress. Before the Fed began raising interest rates, commercial real estate’s reliance on low-cost financing was a boon for that sector and real estate in general. Naturally, low interest rates tend to make borrowing cheaper for investors and developers. This can stimulate demand for commercial properties as investors seek higher returns compared to other lower-yielding investments. It wasn’t that long ago when money market rates were near zero. Thus, lower financing costs tend to encourage developers to undertake new projects, leading to increased construction activity and expanded supply in the market. Moreover, low interest rates bolstered property values. When financing costs are low, investors may...