Given the state of the economy, it wasn’t particularly surprising that the Federal Reserve chose to keep rates unchanged. What did raise a few eyebrows was three members voted to raise rates, citing a an ongoing concern over persistent inflation. Analysts now expect the Fed to raise rates later this year.
Homebuyers can expect mortgage rates to remain in the 6.5% range with the possibility of higher rates if inflation remains a problem.
The effects are already being felt in Florida – and soon may spread to the rest of the country.
For starters, flood insurance renewals as administered by the National Flood Insurance Program are not being processed. New construction has stalled as environmental permits stack up. Federal loans for homebuyers are a no-go.
This, of course, is catastrophic for Florida where real estate is 24.1% of it’s gross domestic product – the largest percentage of any state.
If the shutdown extends for weeks into the future, analysts worry that it can have a strong negative effect on factors such as jobs and consumer confidence.
Concerned about tariff-related price increases, the Federal Reserve held interest rates steady and hinted there may to up to two rate cuts before the end of the year. There is also concern that the “Big, Beautiful Bill” currently under discussion in Congress could add up to $3.4 trillion to the national debt.
Reactions were as expected. The President called Federal Reserve Chair Jerome Powell “stupid” for not lowering rates and the markets wobbled a bit.
Yes, inflation is down, the Federal Reserve has cut the interest rate (with, hopefully, more to come), and more houses are on the market. Still the living is not easy so it’s always nice to know areas where your dollar stretches a bit farther
These states – all in the South and Midwest – have the lowest cost of living. The median home price is also included.
In case you’re wondering, California has the highest cost of living at more than 12% above the national average.
It’s all speculation, of course – what isn’t these days? – but moderate job growth and a rising unemployment rate coupled with slowing inflation have real estate analysts, home buyers and sellers, and just about everyone else, hoping that the Federal Reserve will actually cut interest rates in their September meeting. Currently, the mortgage rates is 6.78% for 30-year fixed loans.
It certainly won’t happen overnight – expect the initial decline to be modest – but once there are significant decreases, expect more home to come on the market with a corresponding drop in prices.
Maybe.
According to a new study by Niche, Berkeley is the sixth most livable city in the United States. The ranking takes into account factors such as quality of schools, housing, employment, crime rates, and access to amenities.
Other Bay Area cities that moved up in the most recent rankings:
Overall, the most livable city in the U.S. was judged to be Cambridge, MA.
Inflation in the Bay Area is near a 20-year high running at a yearly rate of 6.8 percent. Inflation in June 2001 increased by 6.6 percent and in October 1984 by 7.1 percent.
The biggest culprit was utility bills – primarily PG&E – which increases of 18.9 percent for electricity and 16.3 percent for natural gas over a year-long period that ended in October.
Bay Area food prices increased by 10 percent on a yearly basis as well.
For the fourth time, the Federal Reserve has raised its benchmark interest rate by three-quarters of a point but indicated that future hikes might possibly be lower. Noting that hikes take a while to affect the economy and inflation, many analysts expect the next rate increase to be one-half a point.
While the economy continues to grow and hiring remains strong, sales of existing homes have decreased for eight straight months.
Currently, mortgage rates remain above 7 percent, up from 3.14 percent just a year ago.
On average, mortgage rates typically run about 4 percentage points above inflation. That hasn’t been the case for quite a while now.
Currently, builder groups are pessimistic about the housing market.
While home prices will continue to decline – some say through 2023 – no one really has a clue about the future.
According to research from the Federal Reserve Bank of San Francisco, the shift to working remotely from home during the pandemic drove up real estate prices and rents by as much as 60 percent. Moreover, as this shift becomes permanent, home prices and inflation will likely continue to rise.
The study says that each 1 percentage point increase in remote work results in about a 0.9 percentage point increase in house prices, with similar results in rental prices.
Currently, 30 percent of the workforce is continuing to work remotely.