Increasing rates are supposedly the solution for an overheating economy. Rising rates are affecting the housing markets (negatively) and apartment metrics (positively in a contrarian way). Higher rates are slowing down the home refinance market to a crawl and also putting pressure on buyers and sellers. (higher rates = less loan proceeds of course). Today a Freddie Mac study indicated higher mortgage rates are turning some would be buyers into renters (at least until prices go down), thereby increasing occupancy and rents for apartment owners. Of course many apartment owners are bemoaning the increase in fixed and floating rates for their acquisitions and perms. Today’s Fed minutes indicate the committee is united (last month’s increase was unanimous) and convinced more hikes are in order. This is a significant message to markets that the Fed is not bowing to pressure from the executive branch. The 10 year T hit 3.20% again today after a week of huge market volatility. In other contrarian news, the Sears bankruptcy will be good news for many retail owners as many of the affected Sears (or Kmart) locations involve rock bottom below market rent for good infill retail locations. Savvy and well capitalized operators can repurpose the space. Stay tuned. By David R. Pascale, Jr. , Senior Vice President at George Smith Partners