I'm wondering how rising rates will affect commercial and residential real estate which will then back flow into banks and the markets. Sure on one side rising rates will let banks and especially FCM's get back to making money off float...but then what about any R/E slowdown? Residential here in LA and NYC is still in demand especially apartments but commercial R/E is really taking a bath right now...biz doesnt need office/retail space in major expensive areas as much it appears...whole spendy trendy areas of LA are going 50% vacant this year over the past decade. What percentage of income are banks making currently off the residential mortgage business...and what if that take a cool down?
This is what I want to discuss, I did not know the financial structure of those REITs(resident, commercial, utilities), but I suppose they can make money from this model only because they can fund cheep money to take spreads from market, (the biggest cheep money came from FED),they did not solve debts problem or only give a little tip. If this model did not exit after interest raise, they will be squeezed from market or not? Let go and see what will happen next.
Here's an interesting article about the commercial R/E markets...sure I haven't vetted the writer but take his long piece and all the comments together and it shows a very informative picture...anecdotally I see it here in Los Angeles...commerical real estate and store fronts are for lease all over town...reminds me of 2008 all over again. http://www.nakedcapitalism.com/2016/09/us-commercial-real-estate-markets-are-sinking-again.html
This is just a WAG from an amateur. The next trend: Period of high inflation: 1. If the US Government follows through with the get tough immigration policy and kick out all the illegals, no one will do the dirty work for minimum wages, so wages will go way up and higher service prices will follow. 2. Next we force companies to keep works in the US, so no more cheap stuffs. 3. And don't forget all governments are still printing paper money like mad, Japan, EU, China...and are all racing their currencies to the bottom. Will the working class be better off? I don't know but their dollars will certainly buy less. I also think us little guys should lock in a fixed rate mortgage if you have not already done so.