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April, 2016: Rate Hike Still Coming? And Commercial Market Review.

Economic Overview:

RATE HIKE STILL COMING?Expectations for a summer rate hike fell into a sinkhole after the Labor Department reported that nonfarm payrolls grew by just 38,000 this month amounting to the worst monthly jobs growth in 5 years. A decline in the unemployment rate to 4.7% came only because 664,000 Americans fell out of the workforce. All of that happened amid a growing chorus of Fed members professing recently that a rate hike was appropriate and imminent. The economy, they contended, was gaining steam, with employment near capacity and inflation comfortably climbing toward the U.S. central bank's 2% target. Additionally, private consumption—the main engine of the economy—continued to grow, although at a slower clip. Consumer spending is likely to remain buoyant at the outset of Q2 as retail sales surged in April but with the payrolls having the worst job growth in 5 years, now there is uncertainty. Uncertainty means we may see rates stay the same for longer which helps buyers and thus the prices for owners.

Commercial Overview:

NATIONAL ASSOCIATION OF REALTOR'S (NAR) MARKET REVIEW: NAR reviews the performance of the Commercial Real Estate market. Here is the summary of what is happening in the 1st quarter of 2016.

• The pace of commercial transactions dropped in the 1st quarter of 2016, following an upbeat 2015.

• The volume of commercial sales in primary markets & cities totaled $111 billion, a 20% year-over-year decrease.

• Continuing the trends from 2015, apartment transactions comprised the largest share of 1st quarter volume, with $38.6 billion in sales, followed by office properties, which accounted for $31.2 billion.

• Retail and industrial sales totaled $17.9 billion and $12.6 billion, respectively.

• In comparison, sales in secondary & tertiary markets and cities rose 8.5% year-over-year during the first quarter, based on realtors market data.

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