Having good financing available is a major supporting factor in maintaining solid commercial real estate values. Whenever our economy is recovering from an economic downturn, the increased ease with which borrowers can then obtain loans, when combined with being able to buy property with a lower down payment, helps to increase both the demand and the excitement within buyers to own more property, which then helps to support and drive prices upward.
Keeping this in mind, the real estate market has recovered nicely within so many different geographical areas since the last recession, and the ease with which good financing has been available has definitely supported this recovery.
So what does our crystal ball hold with respect to the future…and with the continuance of this good financing still being available? The good news is that the availability of good financing should continue on as long as the lenders believe that the future of the real estate market remains sound.
So right now, while many markets are experiencing sustained levels of value with their commercial real estate, the pace of buyer activity in many areas has slowed, as buyers seem to be wondering whether or not they should still be paying today’s prices.
However, as long as the economy and the job market remain good, today’s real estate values can still remain solid. But at the same time, the lenders, to a certain degree, need to keep a watchful eye on where they believe the real estate market may be headed, and not just focus on where the market is right now.
With this in mind, the amount of available financing should still remain good as long as there are no new warning signs appearing on the radar screen, indicating that there may be a negative turn coming within the economy. In addition, this can be dealt with differently by the various lenders, as the ones that got bailed out the last time may just figure that the same money will be made available to them once again, and these lenders may still remain more aggressive with their lending.
Putting this all together, one thing remains true…the level of available financing with good terms for borrowers will probably not get better than it is right now, within this particular economic cycle.
So if you’re thinking of buying or refinancing, and getting good terms on your loan is very important to you, you may want to take action sooner…rather than later. With this in mind, and in knowing that interest rates are now on the rise, it will probably be some time before we see interest rates become lower once again.