It is now very clear there will be no rate reduction in June and the likelihood of September just was reduced by the more recent numbers on a variety of economic data. While jobs seem to be increasing at a moderate rate, they are still not growing fast enough to reduce the participation rate and U6 is still about 200 basis points too high. There are still a lot of unemployed and under employed. Wages are still fairly stagnant, and family income on an inflation adjusted basis is still well behind 2007 levels. Factory production continues to drop and capital expenditure is still lagging badly. Bottom line is there is nothing at all that is suddenly going to light a fire under the economy which continues to suffer from excessive and costly regulation and a lack of confidence in the administration. Obama seems to be intent to just get any deal with Iran to the detriment of all else. It was very blatant that when the kings all snubbed Obama's meeting this past week, that the Arabs, like Israel, want no part of the deal Obama is likely to cut with Iran. This and the threat of new terror attacks at home have left an underlying concern that leaves many companies with a reluctance to commit dollars to large new projects.

There is now even a real question if September is when rates move up, although it is still possible. It seems that the economy will not support any real rise, and the dollar remains too high for raising rates. Since the fed and so many economists have been completely wrong about the economic projections, then there is little reason to believe they have any better picture now.

The impact on CRE is that prices will continue to rise, even if more slowly. Cheap debt, loosening underwriting, looser covenants and intense competition among lenders will continue to make borrowing relatively easy at attractive terms and LTV. The problem is the inflation of property prices even in secondary markets is now reaching a point that it is very hard for a disciplined buyer to find deals. This is likely to continue for the rest of the year as rates remain low. Having looked at deals all across the country, it is harder and harder, and now almost everything goes to auction driving prices too high as some buyer are desperate to find a deal and there is way too much cheap capital floating around.