USA Law and Practice Contributed by: Richard L. Rosen, Leonard S. Salis and Dennison Marzocco, Rosen Karol Salis PLLC
1. General 1.1 Main Sources of Law
Moderately High Interest Rates Federal funds rates remain steady at a range of 4.25% and 4.50%. Mortgage rates continue to hover near 7%, with the average 30-year fixed rate mortgage at 6.84% as of March 2025 – slightly higher than the rate at the same time last year. Geopolitical Issues The war in Ukraine continues with great intensity in its third year, and the spillover from the Gaza war and the Red Sea crisis continues, despite some efforts to end these conflicts. Perhaps more directly affecting the global economy are the various tariffs that have been floated by the Trump administration and which, as of the date of this article, have been wholly or partially implemented. It would be unsurprising if tar - iffs directly affecting the costs of construction materials more broadly affected the real estate industry. Low Residential Inventory Low rates of homebuilding and persistently high demand keep inventories tight, especially in high-cost areas. For example, according to the New York Association of Realtors, as of 20 March 2025, New York home prices have increased for 19 consecutive months, while inventory remained at record lows – not a posi - tive combination. Low Vacancies in Multi-Unit (Rental) Properties Many large US cities have low vacancy rates in residential rental units, resulting from competi - tion between potential renters leading to contin - ued upward price momentum (although some smaller market cities have shown a cooling in prices as the rate of in-migration has slowed).
Real property law in the United States is primarily derived from the common law of the states and has been modified over time by statute. Certain aspects of real estate law are governed by feder - al law. For example, federal law makes discrimi - nation in real estate transactions on account of race, colour, religion, sex or national origin ille - gal. Environmental issues affecting real property are typically governed by federal law. US courts have also shaped real property law through the interpretation of statutes and common law, to address various issues such as eminent domain, zoning and landlord-tenant disputes. 1.2 Main Market Trends and Deals While typically volatile, the US real estate market is currently affected by various macroeconomic factors. The Residual Effects of Inflation While the rate of inflation in the United States has decreased to about 2.8% as of February 2025, the inflation-affected costs of goods, labour and real estate prices remain at all-time major market highs. As a result, rental prices remain high as well. The increased cost of labour and materi - als has also impacted the costs of owning and operating commercial real estate. Further, these factors, along with the cost of financing gener - ally, have affected the ability of commercial ten - ants to operate profitably while paying the rents that landlords require. The combination of these negative factors has had a general impact on the commercial real estate market, which has somewhat countered the upward inflationary pressure.
1097 CHAMBERS.COM
Powered by FlippingBook