Article By: Jim Porter – October 13, 2023
War, what is it good for? The answer is almost absolutely nothing for our local real estate market. The only good thing that has happened since the horrific 5,000-missile surprise attack on Israel is investors have been moving money out of stocks and into less risky federally insured bonds and things like gold, silver, copper, real estate and energy.
When lots of people buy bonds, yields come down and mortgage rates follow. Prior to this war breaking out the employment numbers looked favorable for the Fed to stop crushing our housing affordability index with more rate hikes. The oddsmakers on Wall Street are now saying there is only a 12% chance of another rate hike by the Fed in November after 11 hikes since March 2022.
The Fed will not be making any victory speeches anytime soon, but I sure feel like they have crushed the American consumer’s confidence and ability to spend with mortgage rates at 8%, credit cards at 24%, and, holy cow Batman, it cost me well over $100 to fill up the Batmobile last week.
This price of gas, $32 trillion in federal debt, the government printing money like it is going out of style, this war breaking out, the open border crisis, credit card and automobile loan delinquency rising, the pandemic federal funds stimulus money bank accounts now empty, the payments due this month on student loans, and housing affordability at an all-time low, it sure feels like a recession coming to a community near us all soon.
This will help our local real estate market because we have been in a real estate sales contraction and recession for 18 months and as soon as we have an official recession for the rest of the economy, which the Fed has been shooting for since March 2022, mortgage rates will come down and 2024 will suck a bit less than 2023 for our homebuyers and our beloved local lenders and Realtors.
Jim Porter, NMLS No. 276412, is the branch manager of Solano Mortgage, NMLS No. 1515497, a division of American Pacific Mortgage Corporation, NMLS No. 1850, licensed in California by the Department of Financial Protection and Innovation under the CRMLA / Equal Housing Opportunity. Jim can be reached at 707-449-4777.
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