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**Walker Webcast Recap: Economist Peter Linneman Talks Fed Policy, Housing, and Market Headwinds**
On October 8, the Walker Webcast returned with what has been dubbed “The Most Insightful Hour in CRE,” hosted by Walker & Dunlop Chairman and CEO Willy Walker. Joining him for the 23rd time since the start of the series was renowned economist Peter Linneman, Principal of Linneman Associates.
The webcast covered a wide range of topics including energy prices, the impact of a government shutdown, employment trends, and even the symbolic reading of the Declaration of Independence at Philadelphia’s Independence Hall. As usual, the conversation between Walker and Linneman featured both agreement and spirited debate.
**A Cloudy Economic Picture**
Kicking off the event, Linneman noted a more cautious outlook than in past discussions. He cited fluctuating market intelligence and the lack of economic data due to the recent government shutdown as reasons for his diminished optimism.
When asked how the lack of data might affect investor behavior, Linneman humorously advised, “If you don’t have anything to do in the next three weeks,” implying that investors should wait it out. He added that agencies like the Bureau of Labor Statistics will eventually return online to provide insights necessary for solid decision-making.
**Federal Reserve Policy: Defiance and Delay**
Linneman expressed hope that the Federal Reserve might sneak in another rate adjustment by the end of October, making it clear that indefinite “pausing” is unrealistic. He projected three rate cuts by the end of 2025 and shared a bold opinion suggesting the Fed’s hesitation to cut rates is partially political.
Referencing former President Donald Trump, Linneman said, “They’re basically giving Trump the finger.” He indicated that the Fed may be avoiding rate cuts to prevent appearing influenced by Trump’s outspoken public persona.
**Housing Market: What’s Really Behind Sluggish Home Sales?**
Home sales and the broader housing landscape were front and center in the discussion. Walker reminded Linneman of his previous estimate that the country needs 3.5 million more homes, insinuating strong demand. Despite this, homebuilders aren’t exceeding their cautious budgets.
Linneman stood by his supply analysis but acknowledged obstacles. Regulatory costs and local government policies can limit development. The real issue, however, lies with buyers’ financial readiness—particularly, the down payment.
Recounting research he conducted in the 1990s, Linneman dismissed the idea that income is the primary barrier to home ownership. “Income determines the kind of home you buy,” he explained, “but the down payment is what determines if you can buy at all.” He added that rising home prices and evolving social priorities among younger generations further complicate the ability to save.
“Young people today would rather go on a ski or Caribbean holiday than save for a house,” he said. “They dine out every week, use food delivery apps, and overlook how these small habits add up.”
**Foreign Investments: Confidence or Comparisons?**
Walker posed a question about foreign capital, asking why international investors continue to buy U.S. assets despite political and economic instability. Linneman offered a dry but insightful response: “It’s not that they have great confidence in the U.S.—they just have less confidence in everywhere else.”
He likened these investors to teenagers complaining about their home life: “They grumble all day, but still show up for dinner at six.”
**CRE Markets: Office, Industrial, and Where to Watch**
Reviewing Linneman’s latest research letter, Walker noted that there was no clear “winner” market for commercial real estate investment in Q3. However, some cities did stand out: Miami, Charleston (North Carolina), and St. Louis showed resilience in office demand, while St. Louis also ranked strong for industrial performance.
That said, Linneman clarified that “St. Louis” in this context refers to the broader metro area, not the city itself. “The metro has had relatively slow growth and almost no development,” he noted. He referenced similar advice he had given about Detroit years earlier—pointing out opportunities in overlooked markets where little new development is happening.
Linneman’s takeaway: Investors should consider markets with growth but no building. However, he cautioned, “This would be interesting for an owner, but maybe not for a developer.”
**Catch the Replay**
An on-demand replay of the October 8 Walker Webcast episode is available through the Walker Webcast channels on YouTube, Spotify, and Apple Podcasts. Subscribe to the series for weekly episodes featuring top voices in real estate, economics, and business.
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