Fed Raises Rates .75%
Fed Raises Overnight Rates .75%, will it affect the housing market?
Everybody, the Fed did what they said they were gonna do, They raised their rates three-quarters of a point morning, joe, how are you dark over here?
The light was just like, it didn't want me to be wouldn't be in the shadows.
It's like, he's talking about rates, Let's hide, joe.
I thought it was a great reveal, you know, slowly coming up. Here's joe man. Alright. Oh yeah.
Yesterday guys, 75 tips, You remember like Six months ago, how we were freaking out over 50 pips and then here we are today, 75 years and we don't even know that that's what I thought.
I think most of the movers expected the same thing because what happened yesterday after the Feds announced 75 dips, we actually saw some pricing improvement on the mortgage side.
That's that's interesting because I was reading an article last night and I think this is something we gotta continually drive home to people.
Um, It was in the mortgage news when we look at every day, um saying that oftentimes the Fed's rate adjustment actually improves mortgage rates overall, you know, for a day or two.
And and just explaining that, hey, the Fed rate and mortgage rates are two different things and they're not totally there.
They're not really tied together as much as everybody tells you they are.
And it's, it's hard because sometimes I was out showing at a builder with a young couple yesterday.
And the first thing out of both builders mouths as well. The Feds, you know, increasing rates again.
So you don't want to, you know, you know, delay and you're like, well that's not how it works, you know, and they look at you like, it's like, well it's not, you know, I'm sorry, it's not how it works, you know, and we've we've mentioned this multiple times and I, you know, I tell every one of my clients, you want to know what rates are, follow the 10 year treasury now, yield goes up, rates are gonna go up, yield goes down, rates are gonna go down, that's how everything is tied, you know, and that's that's the easiest way to track it.
It is, it is, you know, because the Fed rate is quite honestly, it's just the overnight rate banks lending to banks.
It is, it is, and I guess, you know, I've I've kind of like we were talking earlier, you know, kind of this week's been kind of frustrating and oftentimes it's a lot of things like that.
Little things frustrate me. It's like telling the whole picture, not that little tidbit, you know, tell, tell people really how things work.
Yeah. Um So they really understand and it's just not a, you know, soundbite thing from, from CNBC or whoever happens to be out there.
And then, you know, the other thing came out with the Fed yesterday and this is where I find them in a double speak is, oh, we're gonna be aggressive, we're gonna be aggressive, but if you were aggressive, you would have done the one, you know, not you actually with that 1.5.
Um, but you truly wanted to be aggressive and they're, they're trying to, they're trying to slow down the economy and do a soft landing.
But as long as I've been alive, I don't ever remember the Fed getting it right.
I don't remember, you know what, you know what I think about is like when you're driving a vehicle or something and you like if you take your foot off the gas and you just let it coast, it gets a lot harder to steer right.
And I feel like a little bit of where we are right now is they're trying to do this soft landing, but they're really trying to just ease and it's all like this show and tell, but it's like they're just guessing, I mean they're guessing they're straight up guessing they don't and these are policy makers and there, but the problem is is We haven't been here before and everybody's like, well, we're here in 2008.
No, this is totally different in 2000 and it's totally, I mean, it is interesting.
The federal funds rate is now where it was at in 2008. So that's his name.
The other thing that was interesting and I sent it to you because it got snuck through without any big headlines.
Anything like that is last week. The Feds stopped buying mortgage backed securities totally stopped.
I loved how like, that didn't make any news. Something like, I feel like that was nowhere.
The only reason why I got it because I watched this 11 channel Wolf of Wall Street and he usually gets those kind of funky art, he does those funky articles and the news that kind of kind of stays out of the headlines.
And I saw that and I'm like, wow. Because you think about it for the past, was it 2.5?
Almost three years, if not longer.
They have been buying a lot of the mortgage backed securities and by buying those mortgage backed securities, they were they were buying the majority there.
Good reason why the rates were so low because you had a steady buyer, you had the Fed who were buying them.
And that's quite honestly, that's the way that's a type of quantitative easing because they're buying them.
So now what they're doing is they're not buying anymore.
What they were doing is, as people refine, you know, they would fall off the sheet, off the off the balance sheet.
So now they're just gonna let them slowly roll off the balance sheet.
They still got, I think like $2 trillion dollars worth something like that. Excuse me, if my numbers wrong.
But there they'll let those roll off the balance sheet, you know, they're not gonna buy any more.
The thing that that tells me is I don't really think we'll ever see the 3% 2.5% that we saw because we don't have unless the Fed comes back into the mortgage backed security because they feel that they've done too much damage to the housing market and start buying again.
You know, where I feel we may see something as I feel like we may see them enter back and maybe we get down to around the force again, like that's what I kind of see is if they enter back, it'll be like, we get down to the force and then we go back up and then we get down to the five and then we'll go back up a little out wherever we end up leveling out.
But I think we're probably, you know, I, I can see long term that where we are today could be long term for the next, you know, we can be somewhere in this realm of 6 to 7 range for a while now, which actually they're not, you know, again, they're not bad rates historically, they're really, really not bad rates and it's um, we're seeing the, seeing the market, Orlando has just been so consistent and we'll see that in the numbers a little bit later, but you're seeing parts of the nation and especially out west where, you know, California Utah, which went through the Idaho went through through some of the biggest jumps, you know, they're, they're actually starting to pull back on price, they're seeing it to 3% pullback on their prices and that's just the start, you know, so we kinda, you kinda want to see rates level out, you know, because it's a, at the current pricing, people can still buy homes, they can still buy homes, you know?
And I think you and you and I had talked to talk to a prospect and I've talked to a couple others who are running currently and here in Orlando.
I mean I think they're in a 22 and another one was in a 2 to 1 was in a three to, there wasn't one of them with a, with a rental payment under $2500.
And I'm just like really? Yeah, race.
I mean we all say it's like it's out of control, right? It's a supply and demand peace in florida.
We don't have rent control like you have in, in a lot of areas.
Um you know, but I think, you know, I think what you end up seeing is, well in florida we're seeing the perpetuation of what's, we still have a housing shortage.
It doesn't matter that rates went up, there's still a need for housing which means rent is going to continue to climb because you gotta do is drive around the, you know, the whole loop for 17, around 4 29 and you know, there's, I mean, D r Horton's got 70 developments in the central florida area.
I was like wow, you know that's that's nuts.
Um But your your starting point really is around that $400,000 mark.
So when you look at it it's like okay it pretty much evens out to where the rents are.
You look at the principal interest, taxes and insurance, I think we calculated one up and it was what 24 $2500.
But you get to own your home, you know, no neighbors above you below you.
So I I think Runners really needs you need to start looking you know and if you are renting out their call us because we'll put together a plan for you.
And I think that's what we saw with with one of our prospects as they were a little nervous to even talk because unfortunately you know they had some you know had some credit marks here credit credit um marks there, but until someone takes you on that road gives you the road map, a lot of these people just don't know how to get themselves in a position to buy.
And I know that's one of the joys that you and I get is when and the quantity is the biggest joys when you take someone who's had that difficulty once that house and you sit down with them and you put out that road map for.
You know we've um we've got Miss Pender who's who's been listening to us.
She's working, she's working on a couple of items that she had and we know she's gonna be probably 6 to 9 months down the road.
But there's a person who knows what they want, they just need some help and no one, no one had ever helped him.
You and I sat down with her and put together that, okay, this is what you need to do now.
We're gonna check in with you in three months to make sure you're doing exactly what you need to do.
And she's like, okay, okay. And they're, you know, they're gonna be ready.
You know, hey, it may be nine months down the road, but who cares?
You're getting these people into a house. Exactly.
Um So that's, that's kind of where the fat is.
You know, it's, we're just, it's, it's one of those things, we're probably gonna see rates shift a little bit up and down.
But I wanted to bring up some good news and everyone needs to call joe because it's very important according to realtor dot com.
Okay, next week, September 25th October one is the best week to buy a house Last week.
The best week to buy a house during the year nationally is September 25 to October one.
Yeah, so you need to call joe, get your pre approval call me and we'll be out, well I can't go on Sundays, my wife's birthday, we'll figure it out on monday, we'll figure it out anyways.
Um So we may have to go monday we got a whole week. Doesn't have to be on the 25th.
We got the whole week right here the whole week.
So just know that you know we've got we've got you covered alright.
And that's you know, we gotta get you pre approved and get you out.
Their grades are stabilized if you're running stop running.
So that's that is our good news point for the week.
So let's happen to the numbers for the week.
We had to bounce back.
Um we jump back up to 500 sales for the week which we had talked about.
We had Labor Day last weekend. So you know, we probably lost.
That's one reason why we probably lost a little bit. Our medium price actually went up a hair.
Our days on market is holding steady right at that 30-33 days.
So when we get into the actual numbers we're still seeing some good discounts off of the original list price, You can see right here on average we're seeing about a $25,000 discount.
And if we go into Where most of the houses are, which is your right there, your 3-400,000 mark.
We're seeing, you know, roughly overall off the original list price. We're actually seeing almost a 5% discount.
So if you're looking at $400,000 house, you're seeing about $20,000 difference from what it originally lists that to what it's selling for us.
So that and pretty much what we're seeing a lot of is after that initial couple weeks on the market, you're seeing starting to see the prices, they're starting to do the drop, you know that 5 $10,000 drop, so it still gives you room to negotiate And we're holding steady at what really the five year averages for Orlando, which is 33 days on the market.
Same thing here, you know, in that 3 to $400 range for 32 days on the market, that just means buyers have a little bit more time to go and really look for what they want.
And the best part is our inventories holden stay, where did the inventory go?
There? It is. Okay. So our inventories continue to host hold steady.
We actually went up about 70 units over last week. Okay. But relatively steady, relatively steady.
Orlando is just a steady market and historically has been, Yeah.
You know, I just, it's, it makes me feel good.
It gives gives me some some reassurance that we're not, again, we're not going to be the big dip in this housing housing correction that's happening right now.
Yeah, I definitely agree with you on that one.
I I think I think that there's gonna be market scenarios and we kind of talked about this before where, you know, during the housing collapse of the early two thousand's and such.
We kind of watched California kind of escape, I escaped, they felt it but they didn't feel like the rest of the nation did I think grew and rebounded very very quickly.
You know, I think we're in that we're going to be that that area.
And the reason why is so many people were moving to California. Well now florida is that that state?
Yeah, we we definitely in that state and you kind of look around and you're one thing you're not seeing is you're not seeing the builders pull back on their developments, there's still some rather large transact faulty just acquired one of the biggest lots of Mount Dora to do new building.
Um Who was I think d are working, acquired some new stuff up into barns.
I mean are the space for the new homes is getting spread out quite a bit.
Um You know there's not there's not a lot of land left in Orange County and Seminole County but the outskirts, you know the Davenport's the clear amounts um Mineola, those areas are still seeing, you know there's still room for plenty of growth and you're still seeing the builders and that was one thing, You know, in the 2008.
I mean the builders literally just dropped their hammers and saws and walked away, walked away and they haven't done that and you don't you don't get the feeling that they're going to do that, you know, we're staying, we're staying very consistent on the number of housing starts in the area.
So it's just underlying economics is we're still holding well here in florida.
We really are, which is nice to see.
So a lot of opportunity out there for, for the buyers, um, which I think you're gonna be doing a separate live, you're gonna be doing a separate video about new builds in central florida and the opportunities for buyers with that.
I think if you're someone that's thinking about buying and building still in this community, you need to be checking out when Brendan goes live for that one and I know you'll get details out on that.
So that's our market. You know, staying slow and steady wins the race.
As they say, that's what it is right now.
You know, it's not been as much excitement as it could have been yesterday with the Fed announcement, everything how pretty steady.
Um, I'm hoping we see a little bit of a stabilization of rates.
They've been kind of very aggressive and their climb up.
But this week has been relatively soft, like most, I think most of it, you know, most of it got priced in at the .75 if they had gone to the full point.
I think, I think we would have seen worse pricing. Yeah.
But I'm just the numbers over the next couple of months, I think are really what's going to determine how far they go.
Yeah, Yeah. You know it, if we can see a drop, you got to see at least a couple of percentage drop in inflation, you know, it's gonna be back, we saw gas prices go back up this week, you know, or I mean it was a small increase but it's like, like you know, it's the one thing that I'm in, you know what's gonna be interesting is there's with everything going on right now we may have the mixture of the late season tropical system enter the picture Which that could have and this is the crazy part like these are the things that a lot of people don't realize is, let's say right now it's in what is in like the South Caribbean or what not supposed to be heading into the Caribbean and then turning making a northern turn into and it's not even a storm right now, it's just, it's just some rain.
But if it develops into a storm it could be in like 10 days hitting the states and the problem with that is when you go into the Gulf, what does it do?
All the refineries get shut down which can impact that, which is gonna increase.
Like when you already have a tax system that we kind of are right now, that's, that's, that's challenging embracing with inflation.
We really don't need, we needed to like not do anything and dissipate and go away.
I don't know if we will, we've had a really, really quiet season.
Um Yeah, it has been very quiet so far and quite honestly, the past couple of years we've been very fortunate.
I mean I think it's been almost six years since the last storm that's hit florida major storm.
Um I mean there's been some tropical, like tropical storms as such, but that's just, you know, in florida, it's not a higher right?
So, but we are we're in a situation where I would I don't want to see that, but those would be some really interesting economic pieces to see how can how can a storm impact it.
Like those are the things that I think right now would have a bigger impact on a inflationary number nationally because our system's taxed right now across the world with everything with Ukraine, with this, with supply chain, all these different issues you throw in a storm that disrupts things for a week.
It can have a much longer residual impact than a storm normally would, so hopefully it stays away.
Hopefully it's nothing and we don't have anything to worry about.
Hopefully it just goes away altogether, you know, and it doesn't build into anything.
Um But you know, if it does, you know, this is where, you know, Brendan you and I take the time to look at these things and go, how do these things impact us?
How does it play into the bigger picture because, you know, a year ago, if you were to talk inflation, the feds were still saying inflation is transient like it's it's good, you know, it's like a fish out of water, you know, it's there, but it's just flopping around.
Um but now we're like now it's a big problem, you know, it's interesting to see that.
So I think, yeah, I think for us it's gonna be interesting the next couple of weeks to see if something happens with it, but hopefully nothing and hopefully we start to see inflation numbers go down a little bit.
But if they do go down it's it's I don't think it's really much of the federal funds rate being bumped up.
That might help a little bit, but the federal funds rate would need to be like a 7% right now for it to really have an impact on inflation.
Yeah. And like, you know, like when I talked to earlier it's it's I understand that, you know, they say they're not political, but there's politics involved.
There always is, you know, and just this whole idea of a soft landing is like, okay, you got the plane, you got this huge crosswind, you know, coming at you and you're trying to, you know, cut through it to land and reminds me of I was with my my my buddy, he had assessment, we're coming into atlantic city and we had a crosswind and he was trying to, you know, do a soft landing and I thought we were gonna flip, you know, the wind just burst underneath us, you know?
And that's kind of how you feel. And it's like it's like let's just get it on the ground.
Let's just get it on the ground, please, you know, just get it on the ground and everything will be fine.
So All right, well, thank you everyone. Um we'll look forward. You're gonna be out next week, Right?
Yes, next week. I'm out like you're gonna be flying solo next week. Ok? Ok. I'll cover you.
You know, it'll probably be the best episode. Alright man, take care.
Have a fantastic day.