Accelerating economy, small development pipeline support positive real estate fundamentals

MetLife Investment Management has published its fourth-quarter 2018 Investment Strategy Quarterly, “Real Estate and Reflation — How Rising Deficits and Partisan Gridlock May Work in Real Estate’s Favor.”

The report points to the fact that accelerating economic growth and a small supply pipeline relative to history have left real estate fundamentals in a solid position, especially when compared to similar periods in past cycles. Risks to near-term economic growth remain relatively few, although a combination of a tight labor market, trade disputes, and deficit spending are raising concerns about an uptick in inflation. In addition, rising deficits and the threat of government dysfunction may leave the Federal Reserve in the unfortunate position of balancing its low inflation mandate with the economic repercussions of a potential U.S. Treasury rating downgrade. The report examines how the Federal Reserve’s attitude toward inflation may be due for a shift, one that will likely benefit the real estate sector.

To read the full report click here.