Fed Update: “We’re in the Longest Seventh Inning Ever”

When asked for his high-level view on the outlook for real estate, Brian Bailey, with the Atlanta Federal Reserve Bank, brought on the sports analogies.

“People continue to ask, what inning are we in? And I’ve begun to respond with, this is the longest seventh inning ever,” he said (to much laughter) at the 10th Annual Real Estate Forum.

Indeed, we’re at a precipice of “closing out” a very good economic cycle. Growth has been ongoing and healthy, unemployment is low, and we’re beginning to see wage growth.

The commercial real estate industry has followed suit, particularly in regard to apartment complexes. This surge has been impacted, Brian explained, by technology. From drones to e-commerce, technological developments have changed the way real estate professionals market commercial properties and how buyers look for them.

This growth, however, isn’t without its issues. The increase in properties with higher-end amenities has created a shortage of affordable housing—a problem discussed throughout the Real Estate Forum. Brian also cited the emerging coronavirus outbreak affecting not only Chinese business operations but the entire world economy as well.

And then of course, there’s the matter of being in a presidential election year. While the Federal Reserve is apolitical, business owners are paying close attention to the polls and campaigns.

“We’ve had a number of business contacts talk to us and say, ‘We can operate whether it’s the red team or blue team winning.’ But certainly there is a significant divide right now,” said Brian. “And the uncertainty that this creates… some of the businesses have told us that they’re taking a little bit longer to make some investment decisions right now.”

That said, Brian still feels that the outlook is good as the industry addresses affordable housing and navigates the challenges this year is bringing. “We’re forecasting for 2020 that we’ll see continued stable growth. We’ll continue to see unemployment levels that are atypically low, which is certainly good news.”

Please note that Brian Bailey’s comments are his opinions and not necessarily those of the Federal Reserve.

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