Fed Fallout
Commercial Observer
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The Federal Reserve left key borrowing rates unchanged on Wednesday. What’s that mean for a commercial real estate industry that was counting on cuts? Read on today. Also check out a trend in Florida’s new condo market, where it seems the surest way to sell a new unit is to price it above $1 million.
— Tom Acitelli, Deputy Editor
Fed Holds Interest Rates Again, Says More Inflation Progress Needed Before Cuts
The Federal Reserve as expected kept interest rates unchanged for a fifth straight meeting Wednesday while also signaling that potential cuts may not arrive as early as many in commercial real estate would like. The central bank kept its benchmark interest rate at between 5.25 percent and 5.5 percent and said in its post-meeting statement that reductions would not occur until there is sufficient progress with shifting inflation toward the Fed’s 2 percent target. The Fed’s five straight interest rate pauses since September comes on the heels of 11 rate hikes in 12 meetings implemented from March 2022 to July 2023 to bring borrowing levels to their highest point in 22 years. “Inflation is still too high," Fed Chairman Jerome Powell said in opening remarks of his post-meeting press conference. "Further progress in bringing it down is not assured and the path forward is uncertain."
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In South Florida, the Surest Way to Sell a Condo Is to Price It Above $1M
The luxury condo market in South Florida may prove resilient this year as developers add to the supply of the area's priciest condos. What defines luxury condos and distinguishes them from lesser condos is debatable. But everyone agrees luxury doesn’t come cheap. And, this year, the number of seven- and eight-figure condo sales in South Florida may increase more than the number of six-figure sales. Sales of condos for $1 million or more increased 9.7 percent in Miami-Dade, Broward and Palm Beach counties in the first quarter, compared to the same period last year, while the total number of condo sales fell 12.3 percent, according to monthly reports on transaction volume by brokerage Douglas Elliman. The brokerage firm reports that sales for $1 million or more accounted for 11 percent of the 5,872 condo sales in South Florida during the first quarter, compared with 9.3 percent of the 6,695 condo sales in the first quarter of 2023.
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