Inflation would help the valuation problem currently ailing the commercial real estate market, according to Charles Trafton, vice president at The Boston Company Asset Management – but the inflation will come as a result of higher interest rates, which may negate any benefits to the commercial real estate industry.

Trafton spoke on a panel this morning at a Real Estate Finance Association discussion in Boston on deciphering real estate capital and asset valuation. Among other things, panelists noted how current government actions will change the commercial real estate market and the valuation of real estate.

Trafton advised the assembled real estate finance professionals to keep their eyes on U.S. currency, predicting increased widespread hysteria over the collapsing dollar in the next few months.
He speculated Federal Reserve Chairman Ben Bernanke would eventually raise interest rates to "inflate our way" out of debt, which would hit food and retail goods initially, and then may leak into real estate values.

 "The financial crisis is over," Trafton said. "[It has] peaked, and it’s declining." Credit is still not easy to come by, he said, but it’s easier than it was a couple months ago.
The federal government might still be talking about how to unload assets from bad banks, but Trafton said he believes the Federal Reserve itself is the bad bank right now, having rescued the worst of the worst – such as Bear Stearns – already.

Overall, lower taxes and less regulation would help the economy grow, he said, but "that’s not in the cards … Ronald Regan is dead."