Fed holds rates, cuts ahead? 😅

Today’s top stories…

• Fed holds rates steady, signaling potential cuts later this year

• Housing market shows signs of recovery, but is it time to invest?

• 10 cities where home prices are falling: opportunities or red flags?

• Deal of the Day!: 4 bd | 4 ba | Scotland, MD This one is 🔥🔥🔥!

Today’s mortgage rate (30 Yr. Fixed): 7.03%

Fed Holds Rates, Hinting at Future Cuts

Real estate investors, the Fed's decision to hold interest rates steady while projecting three rate cuts later this year could have significant implications for your investment strategies. Despite cooling inflation, prices are still climbing faster than the Fed's target, prompting them to maintain rates at their highest level in over two decades to tame demand and stabilize prices.

The economy has shown resilience in the face of high rates, with the unemployment rate remaining below 4% for more than two years and employers adding an average of 265,000 jobs per month in the last three months. However, the housing market has felt the impact, with existing home sales falling 19% last year to their lowest level since 1995. The average 30-year mortgage rate was 6.74% last week, down from a peak of around 8% in October.

Retail sales have also slowed as consumers grapple with high prices and borrowing costs. Credit card debt surpassed $1.1 trillion last year, with more users falling behind on payments compared to pre-pandemic levels.

As an investor, it's crucial to track rate changes closely, as cuts could spur housing market activity. Look for value opportunities in the current market slowdown and consider fix-and-flip or rental strategies to capitalize on pent-up demand. Investing in eco-friendly, community-oriented properties may also offer long-term appeal to a growing segment of environmentally and socially conscious buyers and renters.

Housing Market Rebounds: Time to Buy?

The recent housing data for February offers a glimmer of hope for the industry, which has been in a recession for about two years due to the Fed's aggressive interest rate hikes.

Despite the challenges, homebuyers are still in the market, thanks to a low unemployment rate and assistance from homebuilders in the form of mortgage rate buydown incentives and price cuts in some markets. The latest data shows that permits are up 1% to the highest level since May 2022, while starts have increased by 11.6% to the highest level since April 2022.

This rebound in residential building investment, after nine consecutive quarters of contraction, is no longer a drag on GDP and may even start contributing by this summer. The turnaround in the housing market is good news for ancillary industries, such as banks with mortgage businesses, furniture retailers, and appliance and deck manufacturers.

It's essential to keep an eye on the Fed's actions and their impact on the market. With Chairman Powell set to deliver the FOMC statement and press conference, all of Wall Street will be watching closely for any hints about potential rate cuts later this year. The market's reaction to Powell's statements could present opportunities for savvy investors to capitalize on.

Despite the uncertainty surrounding the Fed's future actions, the stock market bulls remain in charge, with the S&P 500 closing at another new record high. Keep an eye out for value opportunities that align with your investment strategy.

Price Drops in 10 Cities: Where to Invest and Where to Hold Off

Realtor.com has just released new figures showing house price declines in 10 cities across the U.S., but before you rush to buy, let's take a closer look at what's driving these changes and whether these markets are ripe for investing.

Miami, once a pandemic hotspot that saw prices soar by 56% in just over two years, is now experiencing the most significant decline, with a median list price down 8.2% year-over-year. The influx of transplants and a surge in condo construction have contributed to this correction. However, investors should be aware of the city's complex short-term rental rules and rising home insurance rates, which could impact cash flow.

Turning our attention to the Midwest, cities like Cincinnati and Kansas City are seeing price drops due to an increase in affordably priced homes entering the market. This region could be a smart choice for investors, with lower prices facilitating better cash flow, more lenient short-term rental rules, and potential demand from travel nurses and tech workers in reinvented cities like Pittsburgh.

Northern California's San Jose and San Francisco have also experienced price drops, largely due to tech worker migration and layoffs during the pandemic. However, Silicon Valley's enduring appeal as a tech innovation hub and the rise of AI companies like Nvidia suggest that this trend may be temporary. For well-funded investors, buying now could be a strategic move.

Texas, another pandemic winner, is seeing falling prices in cities like San Antonio, but the state's low taxes and growing tech industry, fueled by companies like Tesla and Samsung, could stabilize prices once the correction runs its course. With an average home price of $298,624, Texas remains significantly more affordable than California, making it an attractive option for long-term investments.

While the Midwest and Texas cities outside Austin offer the best opportunities for leveraged investments and cash flow, Miami, Austin, and Northern California may still appeal to wealthy investors seeking long-term equity appreciation. As always, it's essential to carefully assess each market's unique dynamics and align your investment strategy accordingly.

🔥 Deal of the Day! 🔥

Price: $625,000

Address: 15378 Holly Dr, Scotland, MD 20687

Nestled in a serene location, this vacation rental offers a tranquil escape with its stunning waterfront views, spacious and elegantly designed interiors, and direct access to outdoor activities, making it an ideal retreat for relaxation and adventure seekers alike.

Airdna data:

Estimated monthly payment: $3,780/month (if financed)

Estimated monthly revenue: $6,183/month

Cashflow excludes additional operating expenses. Always confirm local regulations, HOAs and permits before purchasing a property.

See you tomorrow!

✍️ Brett