October 17, 2024

MAJOR ECONOMIC RESET

Will Fed Rate Hikes will cause the 2022 Market Crash to get even worse?

40-Year High Inflation is causing the Federal Reserve to aggressively raise interest rates. These Rate Hikes are now causing Treasury Yields to surge. Which is becoming a BIG PROBLEM for Investors – particularly Real Estate Investors.

MAJOR ECONOMIC RESET

MAJOR ECONOMIC RESET - San Diego Home Mortgage Rates

The 6 Month US Treasury now yields 3.7%. That’s the highest level in 15 Years and is now nearly as high as the Real Estate Cap Rate (4.5%). This low cap rate premium means that Investors, particularly Wall Street Investors, will stop buying Houses. And will start looking to sell.

Some Wall Street Investors might even get a Margin Call by their bank over the next year as the cost debt to own real estate surges due to Jerome Powell’s Rate Hikes. The result will be that Home Prices in America continue to go down as Investor Demand in the Housing Market tanks.

Surging Interest Rates and Treasury Yields will also likely result in a Recession. That’s because every time the Fed aggressively hikes interest rates over the last 70 Years, a Recession in the economy follows.

Always keep in mind, that purchasing or selling a home is a major lifestyle decision, and as such, should not be rushed into. So, by all means, if you’re considering purchasing or selling real estate in today’s market, do your own homework and draw your own conclusions! But, also consult with your legal & financial advisors prior to making your moves.

My opinions here are just that, opinions!  The fact that I’ve been in the residential real estate market for over three decades, does not mean that my opinions are going to be any more accurate then your mother-in-law’s opinion, though I sure hope they are!

MAJOR ECONOMIC RESET

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