Higher interest rates are creating a growing challenge for commercial real estate as loans mature and property values fall. On this episode of Everyday Economics, Chris Krug and Dr. Orphe Divounguy break down what happens when an office or apartment building owner has to refinance at today's higher rates.

They discuss:

• Why higher rates can mean higher debt service and lower property values
• What happens when commercial real estate loans mature
• Why businesses are holding onto workers despite slower hiring
• How AI and productivity are changing business decisions
• What falling commercial property values could mean for city tax revenue
• How lenders and borrowers may be affected as loans are refinanced

Everyday Economics is part of The States, The Center Square's daily news magazine.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Americans are still spending — but they’re changing where and how they spend.

Consumer spending is up 4.5% from a year ago, but households are increasingly trading down to cheaper stores, lower-priced goods and more affordable housing. PhD economist Orphe Divounguy explains why that matters for the economy and for the Federal Reserve.

More than half of new homes sold in August were priced below $400,000, compared with about 46% a year earlier. With mortgage rates rising above 7%, Divounguy expects builders to continue offering incentives, cutting prices and shifting toward smaller, less expensive homes.

The bigger question is whether businesses can continue raising prices. With consumers becoming more price-sensitive and the labor market remaining weak, businesses are struggling to pass higher costs from tariffs and energy onto shoppers.

Chris Krug and Orphe also break down what to watch in Wednesday’s Personal Consumption Expenditures inflation report and why core PCE could remain around 3.3% year over year.

Everyday Economics is hosted by Chris Krug and PhD economist Orphe Divounguy and is brought to you by The Center Square Newswire Service.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

Mortgage rates are around 7.2% — and the housing market is increasingly splitting into two very different experiences.

PhD economist Orphe Divounguy explains why higher rates are keeping many buyers on the sidelines while luxury housing continues to perform well. Builders are responding with major incentives, including an estimated $44,000 per home in rate buy-downs and closing-cost assistance to get buyers across the finish line.

At the same time, inventory is rising in parts of the country, giving buyers who can afford to transact more bargaining power. But for many households, higher borrowing costs and a weaker labor market are making homeownership increasingly difficult.

Chris Krug and Orphe also examine what this divide could mean for state tax revenues, particularly as governments rely on income taxes, sales taxes and capital gains.

Everyday Economics is hosted by Chris Krug and PhD economist Orphe Divounguy and is brought to you by The Center Square Newswire Service.

Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.