Uncertainty Weighs Heavily Over Economy and Commercial Real Estate

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If it’s one thing that markets hate, especially commercial real estate, that’s uncertainty.  Also, election really matter and this one made the situation more uncertain.

In fact, it’s going to be worse than it has been in the prelude to the election given that Obama still holds the Whitehouse and the Democrats the senate and the Republicans the house.  If they can’t reach agreement by year end on a tax/budget deal, then we face a massive tax increase coupled with a massive cut to social programs and the defense budget on January 1st to avoid going over the ‘fiscal cliff’.  The expiration of the Bush tax cuts alone will likely have a huge negative impact.

The big winner or loser will be the economy as it will likely benefit in the short term if the administration and congress can reach a compromise quickly, but we all know how this will play out.  It will be down to the last second trying to negotiate a deal as they do with just about anything and everything.  If there’s prolonged uncertainly, we’ll see it in the 1st quarter 2013 numbers.

Negotiations regarding the deficit and taxes happening now could resolve one of the last giant questions on U.S. policy that weighs heavily on the economy. The other big ones have been answered and not to our liking for the most part.  Dodd – Frank will take effect and Obamacare is already being implemented.

In commercial real estate we just need to know by which set of rules we’ll be playing so the sooner the tax / budget / deficit quandary is resolved one way or the other, the better it will be for the economy and of course commercial real estate investors.