September 18, 2024
Today’s big news is the much anticipated rate cut. The Fed announced an aggressive 0.5% rate cut this afternoon, instead of the 0.25% most were expecting. This is its first reduction since the emergency cuts during the early days of COVID. Aside from the COVID emergency, the last 0.5% cut was in 2008 during the financial crisis.
The yield on the 10-year Treasuries, often cited as a bellwether for mortgage rates, slightly increased after the announcement, indicating that the bond market may have already priced in the 0.5% cut and adjusted accordingly. While this larger cut (0.5% vs. 0.25%) may seem like good news for consumers and the real estate market, it could signal trouble for the overall economy and stock market. It suggests the Fed is concerned that the economy is weaker than expected and is trying to prevent a deeper slowdown or recession. Last month’s massive downward revision of this year’s monthly jobs numbers reinforces the idea that the job market is much weaker than previously thought. From a historical perspective, the last two easing cycles that began with a 0.5% rate cut were followed by stock market corrections ranging from 15-22% over the following 12 months, whereas the last two cycles that started with 0.25% cuts were followed by gains in the markets. Let’s hope this easing cycle doesn’t follow the historical trend.
From a real estate standpoint, I think this will encourage many buyers who have been sitting on the sidelines to re-enter the market. Mortgage demand has picked up recently as rates have been declining, and I expect that trend to continue as more buyers jump back in. However, I don’t think this will significantly affect sellers, as rates are still too high for most people to consider selling a home with a 2-4% mortgage rate and replacing it with a rate in the high 5% to low 6% range. Rates may need to get below 5% before many homeowners with ultra-low rates will consider selling. Until then, we’ll continue to struggle with the inventory issue that has been plaguing us for several years.
Stay up to date on the latest real estate trends.
July 29, 2025
Happy Valley
July 28, 2025
Mid-Summer Review of the Market
July 24, 2025
A Must-Visit Destination for Family Fun
July 23, 2025
A Premier Equestrian Facility in Pleasanton’s Tassajara Valley
July 22, 2025
Small Upgrades Can Boost Your Profits
July 18, 2025
July 15, 2025
July 9, 2025
Realtor's Perspective
July 1, 2025
5 Star Equestrian in Pleasanton
You’ve got questions and we can’t wait to answer them.