WASHINGTON, DC–The release of the Federal Reserve's minutes makes clear that another rate hike is coming soon, most likely in June. To be specific, the minutes indicated that the Fed wants to see evidence of stronger economic growth before approving another increase to its benchmark interest, following the one it made in March. As most analysts will tell you, the evidence of that is ample.

But the CRE community is not happy with official Washington and, this time at least, it is not because of the Fed and its approach to interest rates.

A Pause in Transactions

There is uncertainty with policy that investors have been unable to overlook. So much so that market-watchers have attributed the first quarter's significant drop in investment sales, year over year, in part to it.

Investment sales were down 18% year over year nationwide to reach $94.8 billion, George Ratiu, the National Association of Realtor's director of quantitative and commercial research, tells GlobeSt.com. A year ago the decline was 17% but, Ratiu says, that was due to the fact that in 2015 there were a number of portfolio transactions. “Not so last year,” he says. [see chart below]

In November there was a lot of enthusiasm because it was assumed that bills — especially tax reform — would move forward and regulations would be scaled back. To be sure President Trump has undone many of the Obama Administration's executive orders but little else has happened that is relevant to the commercial real estate industry, Ratiu says.

“Even though we have a Republican-led Congress and a Republican President, we don't seem to have a lot of action,” he says.

Border Tax Divide, Health Care Delays

In recent days it has become clear that the Republicans' push for comprehensive tax reform is lagging. There is a sharp divide among Congress members and President Trump over the border adjustment tax, which would have delivered much-needed revenue to the larger reform.

Also, yesterday the Congressional Budget Office scored the House of Representative's American Health Care Act, which is now being reviewed by the Senate.

It determined that the act would reduce the federal deficit by $119 billion by 2026, however — and this is a big however — it would leave 23 million more US residents without insurance in that same time frame than would be under existing law.

The latter point is expected to give the law an especially steep uphill climb, further hindering Congress' schedule and its ability to get things done.

Ratiu thinks investors will continue to hold back on transactions until policy becomes more clear.

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Interest Rates Will Rise But That Isn't What Bothers CRE About Washington Policy

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