There's more pain coming for residential and commercial real estate as tight credit and job worries threaten property markets
There's more pain ahead for both the residential and commercial real estate market, thanks to a cocktail of bearish forces that are bearing down on both sectors, according to Wells Fargo.
"Our rating on the Real Estate sector remains unfavorable. Numerous headwinds have combined to make residential and commercial real estate investment unattractive based on our current analysis," senior global market strategist Scott Wren said in a note on Wednesday."We expect that further deterioration of the underlying fundamentals is likely."
A little over halfway through the year, financial conditions have tightened after a slew of bank crises, interest rates are at their highest level since 2007, and the Fed is saying it still might not be done tightening monetary policy to fight inflation. The rate on the 30-year mortgage is close to 20-year highs, which has weighed heavily on both supply and demand for homes. Higher rates, meanwhile, have also increased the cost of commercial mortgages and made it more expensive to refinance the mountain of debt coming due in the sector.
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