While most analysts expect three interest rate increases this year, some anticipate four. “I see a strong economy, mounting inflation pressures and current rates that don’t leave much room to be dropped in the event of a recession,” says Adam Ruggiero, head of real estate research for MetLife Investment Management. “From that position, it’s not a leap for me to get to four increases this year.”
The Fed likely will raise rates gradually, at least until there is more wage growth in the labor market, expects Calvin Schnure, senior vice president, research and economic analysis, for Nareit. Schnure predicts a total of three increases this year, 25 basis points each time.
Interest rates are still low by any measure, and small orderly increases pose little threat to real estate markets, says Schnure. The dangers would come if market conditions brought about more-rapid rate increases. But increases in the range of 50 basis points to 150 basis point over a period o