Timeline for Expected Rate Cut Shifts After CPI Numbers Released – Housing Market Still Expected to Surge

CPI numbers released today indicate U.S. inflation pressures cooled in January. Still, the drop was less than anticipated, which lines up with the reasoning behind the Federal Reserve’s caution on interest rate cuts.

Others had been more hopeful, as seen in a survey conducted by FactSet concluding economists were expecting to see a price growth of 2.9%; however, the Commerce Department reported a higher figure of 3.1%. This reflects a 0.3% increase for the month of January on a seasonally adjusted basis, following a 0.2% increase in December.

With numbers hotter than expected, stocks were sent crashing. The Dow Jones Industrial Average dipped 446.16 points/1.15% at midday. Along with this, the S&P 500 index dropped 1.17%, and the Nasdaq followed suit by 1.41%.

In the housing sector, the CPI report revealed an uptick in shelter costs, encompassing both rent and homeowners, which rose by 6% over the last year.

Inflation Report Takes March Rate Cuts Off the Table

Although Jerome Powell made it clear that a March rate cut didn’t seem likely, some were still optimistic. However, today’s report most likely took that possibility off the table. Now, it’s a mixed bag of forecasts, with some analysts penciling in rate cuts for May or June of this year, while others remain skeptical that one will actually occur in the Fed’s May meeting.

In reality, nothing has really changed regarding the timing of the next rate cut. This is reflected in a statement by Chris Larkin, managing director for trading at investing at E*TRADE from Morgan Stanley, “The Fed had already made clear that rate cuts weren’t going to happen as soon as many people wanted them to. Today was simply a reminder of why they were inclined to wait.”

In addition to this, ebbs and flows are expected to happen, leaving some to realize that we’re not really off course. Mark Zandi, chief economist at Moody’s Analytics, describes this when he said, “You get zigs and zags in all these data, and this was just a zag. The bottom line: Inflation continues to moderate. It’s still uncomfortably high, though, moving in the right direction. And all the trend lines still look good aside from today’s data detour.” 

Housing Market Still Expected to Explode

With rate cuts expected at some point this year, all while housing prices continue to surge, experts suggest that waiting for mortgage rates to come down before buying may not be the best strategy. Bright MLS Chief Economist Lisa Sturtevant touched on this when she stated, “The best advice for prospective homebuyers is not to wait for mortgage rates to come back down to where they were a couple of years ago, the super-low, pandemic-era rates are not coming back.”

Property Investors Buy Now to Capture a Higher ROI

Real estate investors who delay their purchases in anticipation of rate reductions may find themselves facing financial setbacks as housing prices climb since this will lead to higher mortgage costs.

Buying now will enable investors to not only dodge increased property prices and higher mortgages, but also the competitive bidding wars that are projected to take place due to a shortage of available homes. This all reflects the perfect storm that’s on the horizon, which consists of rising property prices and limited inventory, paired with pent-up demand, and this will be something investors will want to steer clear of.

Secure a New Construction Rental Property with Morris Invest

With the demand for housing far exceeding supply, those wishing to invest in rental real estate before the market floods can make it happen by contacting a full-service real estate company such as Morris Invest.

We can provide you with a new construction, cash flowing piece of real estate before properties become out of reach. If this has sparked your interest, schedule a call with Morris Invest so we can fill you in on all the details of our available properties, and everything we can do for you to make a purchase happen.

Power Resources for Investors

Whether you move forward at this time or not, you’ll want to dive into the following resources we put together for our clients. In doing so, you’ll find a wealth of knowledge that can help you succeed in your real estate investing journey.

• The Freedom Number Cheat Sheet
• Financial Freedom Academy
• The 90-Day Financial Empowerment Bootcamp
• Morris Invest & SDIRA Program Overview

Before you go, take a moment to watch the following video – This Financial Freedom Formula CHANGES everything. It will provide you with the formula needed to build your real estate portfolio to the point of becoming financially free:

 

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