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The Goldilocks Economy is Real

Contrary to many economic predictions, the U.S. economy refuses to yield to higher interest rates and continues to provide jobs and growth, even as inflation moderates. Yes, the economy is slowing – but conditions remain positive, despite more than a year’s worth of interest rate increases by the Federal Reserve. The US economy grew at a 2.4% rate in the second quarter,1 while employment remains strong2 and headline inflation continues to decline.3 It seems like everything might be, as Goldilocks would say, “just right.”

At IMPACT, we believe that the demand for affordable housing remains as acyclical as ever. In troubled economic times, safe and accessible rentals are critical as household incomes are threatened. Yet in good times, when paychecks are rising at a healthy clip, affordable housing remains in high demand as rents are likely to be climbing as quickly or even faster than salaries.

When multifamily lending is down and banks have retrenched in the commercial property space, we see opportunities to expand into new areas with flexible capital. This includes bridge loans with extended terms to allow a larger group of investors to preserve and create affordable housing. This is why we remain cautiously optimistic that private investors can find compelling investments that expand the supply of affordable housing.

We invite you to read our quarterly market commentary here

1 “Gross Domestic Product, Second Quarter 2023 (Advance Estimate).” Bureau of Economic Analysis. June 27, 2023
2 “Employment Situation Summary.” US Bureau of Labor Statistics. August 4, 2023
3 “Consumer Price Index Summary.” US Bureau of Labor Statistics. July 12, 2023