What Happens When the Rate Relief Everyone Is Waiting for Doesn’t Come?

The hardest part of this housing market might [music] be that people keep waiting for clarity. But yet the market keeps changing the conversation. Today's inflation report came in a lot hotter than expected. Treasury yields jumped and at one point markets were pricing about a 50/50 chance that the Fed would increase the interest rates later in the year. Those expectations moved again during the day. It just shows how volatile this market is. What does this actually mean for the real estate market and buyers and sellers? It means that the relief that people were hoping for, lower rates, more affordable homes, aren't going to arrive on schedule.

Here's the connection. When inflation stays higher than expected, investors demand higher returns on their money. That could put an upward pressure on mortgage rates even before the Federal Reserve makes a decision. The Fed doesn't directly set your 30-year mortgage [music] rate. And for a family, this pressure can come from two different directions. Everyday expenses keep squeezing the budget while financing a home can remain even more expensive. For sellers, there's another difficult reality that we must face. You still may might want the same price, but your buyer's ability to afford it just took a hit. Even if there's nothing wrong with the house and it's the same house as a month ago. That doesn't automatically mean prices are going to crash. Some owners can wait. Others need to move. Those different circumstances help explain why this market feels so uneven. What concerns me is how many housing plans depend on one assumption. Once rates [music] come down, everything's going to be okay. Maybe rates come down, but what happens to the planet if they stay elevated longer than expected? People still have children, they get divorced, they retire, they need to move closer to family, [music] they need to go from a two-story to a single-story. Life keeps happening while everybody is waiting for the economy to cooperate. So, the serious conversation is does your housing plan work under today's conditions? And how much room does it have if the conditions change? Because a decision this big this big needs more support than just a prediction from the Fed. You need a plan. Do you have that plan?