# CRE Lending Update: Bumps, Adjustments, and a Glimpse of Sunshine

- Link: https://johnmorelli.us/cre-lending-update-02262024/
- Published: 2024-02-26T19:59:49+00:00
- Author: John Morelli

#### Real Estate Lending: Bumps in the Road, but a Brighter Future?

Things haven’t been easy for commercial real estate lending lately. Higher interest
rates, a slowing economy, and stricter loan requirements have thrown some sand in
the gears. Refinancing loans is especially tricky, and figuring out property values
is a bit of a puzzle right now.

**The silver lining**? The forward yield curves suggest a low probability of the
U.S. Federal Reserve implementing further rate hikes in 2024.

**Here’s the breakdown:**

 * Multifamily lending is leading the charge, with a predicted 25% jump to $339 
   billion this year. 
 * Overall, CRE lending is expected to reach $717 billion, which is still lower 
   than pre-2017 levels, but it’s a step in the right direction.
 * Experts expect interest rates and borrowing costs to come down a bit, and transaction
   velocity to rebound by 20% to 30%. That means more deals are likely to happen.
 * Prices are down: On average, they’ve dropped 28% from their peak.

Of course, there will still be challenges. The number of real estate brokers is 
expected to shrink by 15-20% by year’s end, so competition might get tougher.

Overall, the outlook for CRE is cautiously optimistic. The market is adjusting to
the new normal, and there are signs of a potential rebound later this year.