Skip to main content

When Will We See Interest Rates Dropping Again? Probably Soon. But There’s More to the Story.

 

It’s still one of the hottest questions in the real estate industry: when will we see interest rates dropping again? Short answer: probably on December 18. The Federal Reserve will be gathering for the Federal Open Market Committee meeting and I am confident that they will announce a modest policy rate reduction to close out the year. But looking at the U.S.’s economic stats in November, I’m hesitant to celebrate. 

Mixed Messages from November

Photo credit: Envato

November was a strange month for the economy. On the one hand, we saw job growth rebound beyond our expectations. With 227,000 nonfarm payroll jobs added to our country’s economy, things seem to be looking up, right? Well, it’s not that simple. 

Because, on the other hand, we watched unemployment rise to 4.2%. That’s over 7 million unemployed Americans. While this likely means we’re not going to see a complete collapse of the job market like we’d feared, it is also up from the 3.5% unemployment rate of November 2023. Together, these statistics paint an unclear portrait of the U.S. economy at a frankly uncertain time.  

I Still Think We’ll See Interest Rates Dropping. But…

All of this further indicates a forecast for interest rates dropping in the very near future. And if the Federal Reserve cuts interest rates, mortgage rates are likely to drop as well. I’m expecting that we’ll see further, though modest rate cuts in 2025 as the Federal Reserve eases us into more economic stability. 

But I also think that we’re witnessing an inflated stock market in the wake of the re-election of President Donald Trump. And there’s a certain danger in building upon perception rather than fundamental growth and development. When artificial inflation meets the spike that we’re seeing in cryptocurrency plus stock market activity built on perception, there’s an underlying risk that the Federal Reserve isn’t likely to tolerate. And if we’ve learned anything from the Federal Reserve’s action post-pandemic, it’s that they’ll do whatever it takes to keep inflation in the mid-2% range. 

Photo credit: Envato

While I still feel confident we’ll be seeing interest rates dropping on December 18 and well into 2025, this multitude of unusual factors could disrupt my prediction. Cutting rates in this unpredictable environment could serve to exacerbate asset bubbles. And, if that happens, I’m worried that we won’t see interest rates dropping much, if at all, in 2025. 

Do Yourself the Favor of a Proactive Approach

So what can you do? I’d recommend resisting the temptation to bank on interest rates dropping because there is no guarantee it will actually happen. And with a wildly different presidential administration on its way in, there’s not exactly a clear, even path forward. In my expert opinion, a proactive approach is the best response to an uncertain future because you’re working with the resources you know for sure; the ones you have in the present. By locking in a plan now, you can get ahead of the changes and spare yourself unnecessary risks. 

If you were already planning to buy or sell real estate or refinance your mortgage in 2025, hop on the phone with your trusted real estate agent sooner rather than later to develop an actionable path forward based on your specific situation. “Now” is the only time that’s certain.

Comments

Post a Comment

Popular posts from this blog

How Terrible Herbst Rose to Become the Best Bad Guy in the West

  Featured image credit: Elizabeth K. Joseph Few companies have risen quickly in the esteem of patrons by offering a truly terrible experience. It’s not the only distinction that sets Terrible’s apart from other businesses. You may better recognize the brand as Terrible Herbst or the Terrible Herbst Convenience Store; a mainstay of Las Vegas life since 1959. Terrible’s made its name by keeping people moving through their daily lives with an extra spring in their step. And they often deliver their countless services in quirky ways that fit the non-conformist anything-goes spirit of the city. Today, we take a closer look at the most terrible brand in the West.  “The P.T. Barnum of Gasoline” Photo credit: Coolcaesar It was in 1938 that Edward R. Herbst opened the far less memorably named Martin Oil in Chicago. It was his first gas station and he already had big ideas for it. In those days, gas stations were primarily focused on providing gasoline to mot...
Post a Comment
Read more

Are You Using Your Green Trash Bin? Who’s Actually Following LA’s Composting Law?

  We know we’ve got nothing but law-abiding citizens reading the JohnHart blog… riiiight? Well, what about the laws you don’t know about? Now, before you get defensive, hear us out: who here actually knows (and follows) LA’s composting law? You know, the reason you have that green trash bin? It’s not just for yard waste if that’s what you’re thinking. As of 2023, Angelenos have been required by law to compost their “green waste”; basically food scraps, yard waste, and the like. Just to clarify, this law applies to the city of Los Angeles. Other municipalities (and the state as a whole) have their own composting laws. In fact, California was the second state (after Vermont) to pass such a law. Now, let’s take a closer look at the city of LA’s green waste law if, for no other reason, than it could save you from a hefty fine!  Ever Heard of Organics LA? Perhaps Organics LA could use a marketing push. That’s the name of a program meant to prioritize the collectio...
Post a Comment
Read more

The Rancho Palos Verdes Landslides Are a Horror 250,000 Years in the Making

  Featured image credit: Dave Proffer We’ve all heard horror stories of homeownership woe. A flooding upstairs bathroom crashing down into a home’s lower level. The spark of electrical wiring burning down a dream. Unseen black mold contaminating everything it touches. But you’ve heard of nothing quite like what’s happening right now in the coastal community of Rancho Palos Verdes. Once a bastion of multi-million dollar seaside properties, heightened landslide activity means Rancho Palos Verdes is threatening to slide away. Southern California Edison (SCE) is cutting power… in some cases, indefinitely. Los Angeles is throwing money at the problem. And Governor Gavin Newsom has declared a state of emergency. As residents continue to dig in and fight for their beachfront homes, the awkward question remains: when do we declare Rancho Palos Verdes uninhabitable?  Not Exactly a Recent Problem Photo credit: Lizzie McVeigh The volatility of Rancho Palos Verdes’s land i...
Post a Comment
Read more