SAN DIEGO—The current uncertainty in the economy and market is higher now than it was at the height of the pandemic, according to Mike Fratantoni, Chief Economist and Senior Vice President of Research and Industry Technology, Mortgage Bankers Association. These uncertainties, he told the audience during the MBA CREF 23 conference and expo on Monday, range from geopolitical uncertainties to policy uncertainty and of course, interest rate policy. "Expect that this volatility will come down once the Fed reaches their peak rate, but it is a big feature of the market right now," he said. "Our forecast is that the US will be in a recession during the first half of this year."
The reason: "The delayed impact of rate hikes will work their way through the economy in the coming months." Meanwhile, the currently strong job market will diminish with the unemployment rate expected to rise, he added.
These trends are already becoming apparent in some metrics, he said, noting that MBA believes that "longer term rates are already pricing in the weakness in the economy."
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Jamie Woodwell, MBA's Head of Commercial Real Estate Research, pointed out another sign of the weakening economy, namely that borrowing and lending backed by commercial and multifamily properties slipped further to close out 2022. According to MBA research, the last quarter of the year typically sees the highest volumes, but "the chill caused by rising interest rates, questions about property valuations, and increased economic uncertainty made the fourth quarter of 2022 the weakest of the year."
Woodwell continued that "Depositories were the one major capital source to increase volumes from the previous year, but even its fourth quarter activity was roughly half of what it was a year earlier. The overall picture is one of slower borrowing in the face of what have been significant shifts in the market."
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
