2020_06_15 — “These Are Not the Real Estate Bargains You Are Looking For”

SYNOPSIS: Few real estate (RE) bargains will emerge from the pandemic crisis; this won’t be like the great financial crisis of ten years prior. Low interest rates will suppress RE capitalization (cap) rates. Demographic growth trends will continue in popular destinations. And large institutional investors will allocate away from bonds and towards the illiquidity premium offered by relatively conservative core real estate.

These Are Not the Real Estate Bargains You Are Looking For

Note: 1) The Fed attempted something similar to yield curve control during and after World War II, from 1942 to 1947. 2) The BoJ has targeted a 10-year rate near zero percent (0%) since 2016. 3) On March 19, in response to the COVID-19 crisis, the RBA set a target yield of around 0.25 percent (0.25%) on 3-year Australian Government bonds.

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