Big news from the Federal Reserve this week: as anticipated, the federal funds rate has been reduced by 25 basis points to a target range of 4.25%–4.50%. Investors are now looking ahead to the dot plot projections for hints of future rate cuts. Meanwhile, inflation shows signs of cooling. Core PCE rose just 0.1% in November, falling below expectations. In the real estate sector, existing home sales surged 5% from October and are now 6% higher than this time last year. The median price for an existing home hit $406,100, marking a 5% year-over-year increase. #RealEstateMarket #EconomicInsights
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I help home buyers & home owners achieve long-term wealth with tailored home loan solutions | (301) 335-6082 | NMLS #537409| PPLSI Independent Associate offering LegalShield & IDShield
𝟔 -> 𝟑 -> 𝟎? Earlier this year, the Federal Reserve signaled as many as 6 rate cuts. The markets loved the optimism and stocks and bonds reacted favorably. Some months later with inflation remaining “sticky”, 6 cuts was changed to 3 expected rate cuts. It’s possible we may get 0 cuts before the end of the year. Inflation readings are not coming down as quickly as hoped. The labor market remains remarkably resilient. And we’re approaching election season where interest rate moves haven’t been common. Through it all, more home sellers are emerging and home buyers are still forging ahead in buying homes. Affordability is of concern to buyers. Some see now as an opportunity while others choose to see what happens to rates. Don’t try to time the market on home buying! Relying on the Fed may not work the way you think. Yes, you may get a lower rate but you’re sure to pay a higher sales price. Refinancing or Buying, Contact Chris Ryan!
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Helping Houston homeowners sell in 12 months through local, national & international marketing | Practical tips to cut listing costs without lowering home value. 👉 Ask Me About the "Smart Seller Package"!
🔔 Update on Inflation & Interest Rates! 🔔 The Federal Reserve is expected to **hold interest rates steady 🏦 this week, acknowledging that inflation is edging closer to the 2% target 📉. With price pressures easing, there might be room for **rate cuts as soon as September! 🚀 This could be great news for the real estate market 🏠, as lower interest rates often lead to more affordable mortgages and increased homebuying activity. Let's keep an eye on these developments and see how they impact the market's stability and growth. 📈 #Inflation #InterestRates #RealEstate #EconomicUpdate #FedNews #MarketTrends #MortgageRates
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ClientFirst Wealth, Legacy & Estate Planning’s President Ed Mahaffy, MBA, CFP®, ChFC® was recently quoted in AOL sharing his thoughts on whether inflation will keep going down in 2025, “Even if the CPI falls from here by another point or so, do not expect your cost of living to fall in tandem. The CPI is now hovering just above 3.0%, down from a high of 9.1% in June of 2022. Has your cost of living fallen by 6%? I doubt it.” Read Ed’s full comments here: Note: Data is from the Bureau of Labor Statistics.
Will Inflation Keep Going Down In 2025?
aol.com
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Rate cuts are starting to happen, this is making it possible for some home buyers to get off of the sidelines. How will the rate cut help you in your business during this last quarter of the year?
Fed Cuts Interest Rate by a Half-Point
https://themortgagepoint.com
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Serial entrepreneur | Pharmacist | Commercial Real Estate Investor | Multi-business owner
A recent Bloomberg article highlights that although inflation seems to be decreasing, the US Consumer Price Index (CPI) does not fully capture some of the big costs people face, especially when it comes to housing and real estate. If you are a real estate investor it is important to keep in mind that mortgage payments, property taxes and home maintenance costs are left out of the CPI. This means there may be higher out-of-pocket expenses that you hadn't planned for or you might have to increase rent in order to account for the true costs associated with owning property. This could also mean new investments are more expensive if interest rates don't adjust quickly enough. It is important to understand these dynamics in order to make informed decisions and still be profitable. https://lnkd.in/gjerW27z 👊🏿I'm Claude, and I am an independent pharmacy and multi-business owner who invests in commercial real estate. If you are looking to learn how to invest in commercial real estate, build a successful business, or simply seeking inspiration to pursue your dreams, follow me. Like and share my content to stay updated on valuable insights. I look forward to connecting with you. #commercialrealestate #investing #RxREI #smallbusiness
America’s Most Famous Inflation Gauge Is Easing — But Some of Your Biggest Expenses Are Left Out
bloomberg.com
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Will interest rates be cut this June at the Federal Reserve’s meeting? Experts believe the likelihood is low, while some believe that there might even be a possibility of a rate hike if the current rates don’t cool the inflation rate further. Inflation remains meaningfully above the Fed's 2% target, and it is taking longer than usual for restrictive rates to slow the economy, much of which has to do with the stimulus money the government was forced to deploy in the pandemic era to keep the economy afloat. As the economy slows in 2024's second half and the Fed begins to ease monetary policy, we would expect mortgage rates to fall gradually and modestly but remain well above the sub-3% lows hit during the pandemic. Since interest rates typically impact cap rates (eventually), understanding the dynamics behind the interest rate environment and national cap rate trends is crucial for savvy investors in retail real estate. NNN Trends is your go-to resource for cap rates that are continually updated, as well as national comparable sales and consumer traffic patterns. Check it out here: https://bit.ly/3yGVRLm #cre #commercialrealestate #federalreserve #interestrates #netlease #retail
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This week, the Federal Reserve made headlines with a significant 50 basis point cut in interest rates, aiming to balance the risks to employment and inflation more effectively. This move, larger than many anticipated, brings the federal funds rate to a range of 4.75% to 5%. The decision reflects confidence in the progress made in controlling inflation without unduly restricting economic growth. Key Economic Highlights: • Mortgage Rates: Despite the major Fed action, mortgage markets remained relatively calm, with rates ticking slightly higher but still near the lowest levels since early 2023. • Retail Sales: Consumer spending in August showed resilience, with retail sales rising by 0.1% from July and 2.1% year-over-year, driven by strength in sporting goods and building materials. • Housing Market: The housing sector saw a slight decrease in existing home sales from July, with a 4% drop year-over-year. However, the rebound in housing starts in August was stronger than expected, suggesting a potential revival in residential construction. Looking Ahead: Economic Reports: Next week will be crucial with several key reports due: • Tue, 9/24: Consumer Confidence • Wed, 9/25: New Home Sales • Fri, 9/27: Core PCE Price Index, a critical inflation measure watched by the Fed. The market’s response to the Fed’s more aggressive stance on rate cuts suggests an adjustment period as businesses and consumers align their expectations with the new economic landscape. As we head into the final quarter of the year, all eyes will be on these indicators to gauge the trajectory of the U.S. economy. Stay tuned for more updates as we continue to navigate these changing economic tides. How are these shifts impacting your sector? Let’s discuss. #EconomicUpdate #FederalReserve #MarketTrends #FinanceProfessionals
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Are we finally seeing a light at the end of the inflation tunnel? Inflation eased for the second consecutive month in May, hinting at a potential shift in the economic landscape. The core Consumer Price Index, often a bellwether for economic health, showed its smallest increase since October—rising just 0.2% from April to May. While this is encouraging, it’s essential to note that groceries, rent, and healthcare costs remain significantly higher than they were three years ago. This ongoing pinch is felt by many, despite an overall healthy economy characterized by low unemployment and robust hiring. For the real estate market, this could indicate a future easing of mortgage rates, making homeownership more accessible for buyers. However, the Federal Reserve remains cautious, requiring more evidence of sustained lower inflation before considering rate cuts. As we navigate these changes, remaining informed and responsive will be crucial for making sound financial decisions. #Inflation #RealEstate #EconomicTrends #HomeBuying #MarketUpdate
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This is an excellent post by Jay Parsons on the lagging effect of rent in CPI calculations and therefore our current interest rate environment. Take a read…it will help explain the disconnect we find ourselves in today.
Rental Housing Economist (Apartments, SFR), Speaker and Author
Here's a great read in The Wall Street Journal about the outsized and lagged influence of RENTS in CPI inflation. A rent survey of ~7,000 renters/month comprises about 35% (via rent AND, yes, owners equivalent rent, too) of the Consumer Price Index. And there are three major lags that most people don't know about. (And frankly, I didn't either until CPI rent became the topic du jour of housing economics and I started digging into it.) 1) Rent is only CPI metric that is NOT a real-time price. It is primarily shaped by "continuing leases" signed many months earlier, which means any change in momentum (like we see today) will be very slow to show up in CPI. There's a defensible reason to do this, yes, but the same logic isn't applied to other CPI categories where your expense may not mirror today's street price. 2) The BLS surveys the same rental units only once every six months. So if you are surveyed today and your rent changes tomorrow, the CPI won't pick up on that for another six months. That's a significant lag. 3) Most leases are renewals, but renewal rents are typically set/signed 2-3 months in advance (and even 6 months earlier in some cities) of going into effect. Another lag. And this is a key one because by the time that lease goes into effect, it's already "old" data. My personal view has evolved since all this started, and my current thinking is that the CPI is underweighting new leases-- which (like private sector datasets) is flat in its own data. Interestingly, apartments have been comprising a growing share of the housing survey over the last decade (80-85% in most recent reporting), and yet the share of new leases in the survey has DROPPED. (I'll post this graphic in the comments.) These two things are seemingly at odds with each other, as apartments typically have more turnover than SFR. As far as I understand, the BLS makes no effort to weight new leases versus continuing leases versus renewals, which might be a potential snag in a small-sample survey like this one. If the weighting were what it was 10+ years ago, the CPI Shelter number would have come down much more than it has. Regardless, the Fed is fully aware of all this stuff, but it leaves them in a bit of a predicament. The Fed makes its impact via new leases, as these become benchmarks for renewals, and the Fed can't do anything about continuing leases. And that impact to new leases has already happened (primarily thanks to new supply on multifamily side). The rest is just waiting for movement in a metric designed to be slow moving. #housing #inflation #rents
Stubbornly High Rents Prevent Fed From Finishing Inflation Fight
wsj.com
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Commercial & Residential Real Estate Professional | Delivering value & maximizing return on investment for property owners through strategic planning
We know that come September 18th; it is likely we will hear that the Federal Reserve will be cutting interest rates. At this point, though we do not know if that would go into effect immediately or sometime before the end of 2024 nor do we know if it will be one cut or if we should really expect multiple cuts by the end of the year. What we do know is that depending on how the economy fares heading into September will determine how quickly the Fed acts. Here is a breakdown of the factors influencing this: 📊Easing Inflation: Inflation rates have shown signs of moderation compared to earlier highs in 2024. This reduces pressure on the Fed to raise rates further. 📊Economic Slowdown: Some economic indicators suggest a potential slowdown, which could prompt the Fed to lower rates to stimulate the economy. 📊Market Expectations: Financial markets are currently anticipating multiple rate cuts by the Fed later in 2024. If the Fed signals a more aggressive stance on cutting rates, we could see a surge in market optimism, leading to increased investments and consumer spending. Potential interest rate cuts could be a boom for sellers. Lower mortgage rates often lead to increased buyer demand, which can drive up competition and home prices. If you are considering selling, now might be a great time to partner with a local real estate agent to explore your options. #RealEstateTips #HomeSelling #HousingMarket #SellersMarket
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