Despite the one recent weak jobs report
overall the employment landscape
continues to tighten and wages are heading higher even if modestly. An increasing number of employers, including small businesses, are reporting difficulty in finding
qualified employees. That would seem to be a sign that rates will drift higher.
Ironically, the 30-year average for fixed-rate mortgages has recently fallen to a 3-year low. Call it 3.75%.
Looking around the bend however I foresee more waves of retail closings. The "Amazon effect" is real and growing. I expect more older suburban malls and strip centers to be closed creating a redevelopment opportunity in some cases. The Aurora Mall comes to mind in Denver. Many Denver area malls have already been redeveloped.
Inflationary pressures are building driven by the turnaround in crude oil prices. rising housing costs and wages. That would normally indicate higher interest rates.
The pending bugaboo is Brexit but nobody knows what the impact would be. Uncertainty always makes markets nervous though.
With respect to potential alternative yields it's worth noting that developer's ROI is being squeezed by higher costs, notably land and labor costs. Additionally the supply side is reaching an oversupply in many urban markets even if modestly.
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