Real estate investors have been enjoying low-interest rates. This makes for higher cash flow, encourages higher asset values, and more purchasing power. “Low-interest rates are the great subsidy in the real estate business,” said Ronald Dickerman, founder, and president of New York-based Madison International Realty. The latest rate cut is seen as another move to jumpstart sluggish economic growth and stymie concerns over trade wars with China. Fed Chairman Jerome Powell cited the “weakness in global growth” and trade developments that “have weighed on the economy and pose ongoing risks” as reasons for the move. The Fed also signaled that it would hit the pause button on future rate cuts.
Keep in mind unemployment is at a 50yr low with the longest period of economic growth since 1854. Federal Reserve Governor Richard Clarida said, "I can't think of a time when the U.S. consumer has been in better shape." Debt to income is the lowest it has been in 40yrs, savings rate is high, and real consumer spending is growing at a rate of almost 3%. In fact, consumer spending makes up nearly 70% of the U.S. economy, a higher percentage than almost every other country. Business investment has been down as uncertainty around the trade war has the business community hesitant. Confidence in the U.S. consumer is key especially seeing 2020 is an election year (historically election years slow the markets). If confidence remains, clarity happens in the White House and a trade deal is reached, well things would rally. Many economists believe we will avoid a recession in 2020 however there is little room for error. A negative outcome obviously wouldn't be positive for the NYC real estate market, but good news might just help give it a little push as most of our issues have been local matters (mostly inventory and the new tax laws).