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Economic factors that could affect CRE prices in 2017

10/14/2016 | Real Estate Blog

Commercial real estate markets in Pennsylvania can be affected by economic factors in the state, the nation’s economy as a whole and world events. Investors that want to stay up-to-date on current market trends should look at a variety of news sources to understand what’s coming in 2017.

One of the factors that may have an impact on real estate prices in the United States next year is global economic and political uncertainty. For example, the United Kingdom’s decision to leave the European Union has led to uncertainties in U.K. real estate markets. If the U.S. property market remains stable, more foreign investors will put their money here. In recent years, there has been more foreign investment in U.S. real estate than ever before, and many real estate analysts expect foreign investments to continue to increase in 2017.

Another global factor that has had a significant impact on the U.S. economy is the decrease in oil prices. At the beginning of 2016, oil prices fell from $110 a barrel to $27 a barrel as the biggest oil producing nations increased their production. Low oil prices can have a negative impact on commercial real estate prices in Texas and North Dakota while other U.S. real estate markets benefit from cheap oil prices.

One economic factor that could have a huge impact on commercial real estate prices is an interest rate increase by the Federal Reserve. Though interest rates remain low, there are a lot of real estate experts that believe the Fed will raise interest rates before the end of the year. A commercial real estate law attorney can inform developers and investors about rising interest rates and other economic events that could affect the value of their properties.