A couple weeks ago rates went up by a quarter point, and Jerome Powell, the chairman of the Federal Reserve, recently said nothing will stop the government from increasing rates by a half a point in May. The expectation is that if the economy tolerates it, rates may go up six times this year.
First Trust, a portfolio manager, stated in their March 18th commentary that home sales had declined in February by 7.2% and were down 2.4% compared to last year. Real estate is one of the first places that see the impact of rising interest rates because the cost to borrow often increases.
The commentary stated, “Despite affordability issues there is still significant pent-up demand, with buyer urgency so strong in February that 84% of existing homes sold were on the market for less than a month. The combination of strong demand and sparse supply has pushed median prices up 15.0% in the past year, but the good news is that price gains have decelerated since hitting a year-to-year gain of 23.6% in May. Put it all together and we do not foresee any sort of collapse in home sales even with higher mortgage rates.”
So, did the interest rates medicine work so far? It seems to have when it comes to real estate. Obviously, there are other considerations to take into account, and this is only one example. My takeaway is we are in a “wait and see” pattern when it comes to the next rate increase in May. Expect unease in the market this year because the market does not like uncertainty, so we may continue to see a market that can’t find its footing as has been the case this year.
If you’re wondering if your accounts are properly allocated for what’s happening with current events, we will run a complimentary report for you outlining the statistical probability of how your accounts may perform over the next six months. If we do nothing else for you, we’d be happy to run this report for you. Just call our office at 864.641.7955.
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.
A couple weeks ago rates went up by a quarter point, and Jerome Powell, the chairman of the Federal Reserve, recently said nothing will stop the government from increasing rates by a half a point in May. The expectation is that if the economy tolerates it, rates may go up six times this year.
First Trust, a portfolio manager, stated in their March 18th commentary that home sales had declined in February by 7.2% and were down 2.4% compared to last year. Real estate is one of the first places that see the impact of rising interest rates because the cost to borrow often increases.
The commentary stated, “Despite affordability issues there is still significant pent-up demand, with buyer urgency so strong in February that 84% of existing homes sold were on the market for less than a month. The combination of strong demand and sparse supply has pushed median prices up 15.0% in the past year, but the good news is that price gains have decelerated since hitting a year-to-year gain of 23.6% in May. Put it all together and we do not foresee any sort of collapse in home sales even with higher mortgage rates.”
So, did the interest rates medicine work so far? It seems to have when it comes to real estate. Obviously, there are other considerations to take into account, and this is only one example. My takeaway is we are in a “wait and see” pattern when it comes to the next rate increase in May. Expect unease in the market this year because the market does not like uncertainty, so we may continue to see a market that can’t find its footing as has been the case this year.
If you’re wondering if your accounts are properly allocated for what’s happening with current events, we will run a complimentary report for you outlining the statistical probability of how your accounts may perform over the next six months. If we do nothing else for you, we’d be happy to run this report for you. Just call our office at 864.641.7955.
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Investing involves risk, including potential loss of principal. Any references to protection, safety, or lifetime income, generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of podcast hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.