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A Conversation with Leading Real Estate Co panies of the orld Chief Econo ist r. Marci Rossell Q. After the turmoil of the last months what advice do you have for investors? One of the strongest pieces of advice can offer is that it is extremely important to revisit what your portfolio looks like. iven the big movements in the value of assets over the last year, recommend that people review and rebalance their portfolio of stocks, bonds, real estate, and cash and evaluate if have the proper asset allocation for where you are in the lifecycle.
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Q. o you e pect a rise in interest rates? We know interest rates are tied to the in ation outlook, and the Federal Reserve in the .S. and central banks worldwide have expressed that they are willing to tolerate in ation running above the normal 2 target for an extended period. think that means we are looking at potentially higher interest rates in the years to come. That does not mean mortgage rates at 7 or it ust means a bit higher than what we’ve come to expect. We also know the Federal Reserve is most likely to cut back its support for mortgage-backed securities first. They’ve been intervening in and purchasing mortgage-backed securities
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since the pandemic began. believe they will wean back their support of markets, and when they do, they will start with mortgage-backed securities given that the housing market is so strong. All of this taken together, believe the lows in interest rates are behind us, but that does not mean they will be high by historical standards. Q. s in ation on the rise? First, think it’s important to consider what in ation is. We all understand that, in general, it means rising prices over time. Things like houses and colleges go up faster than average, but things like technology tend to go down. Average all things together, and we get an overall in ation number that
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Q. Why is that? n some ways, they are doing so in an effort to diversify holdings. One of the things that happens with people who end up with so much stock market wealth is they look around and think, “Where else can put my money ” eople still believe the housing market is one of the safest investments around over the long haul. And, you can get some use of it over time, which you cannot get from the stock market.
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Q. ow has the pandemic impacted consumers from an economic perspective? t shifted the ground between savers and borrowers, where savers are in a much better position. They tend to be people who are older, generally aby oomers and late en ers who are beyond the age in which they have student loans. The savers of the world have been en oying a time with low in ation and low interest rates, coupled with really strong stock market appreciation over the last two or three years. They are sitting on a lot of cash and pouring it into the housing market.
