It’s still one of the hottest questions in the real estate industry: when will we see interest rates dropping again? Short answer: probably on December 18. The Federal Reserve will be gathering for the Federal Open Market Committee meeting and I am confident that they will announce a modest policy rate reduction to close out the year. But looking at the U.S.’s economic stats in November, I’m hesitant to celebrate.
Mixed Messages from November
November was a strange month for the economy. On the one hand, we saw job growth rebound beyond our expectations. With 227,000 nonfarm payroll jobs added to our country’s economy, things seem to be looking up, right? Well, it’s not that simple.
Because, on the other hand, we watched unemployment rise to 4.2%. That’s over 7 million unemployed Americans. While this likely means we’re not going to see a complete collapse of the job market like we’d feared, it is also up from the 3.5% unemployment rate of November 2023. Together, these statistics paint an unclear portrait of the U.S. economy at a frankly uncertain time.
I Still Think We’ll See Interest Rates Dropping. But…
All of this further indicates a forecast for interest rates dropping in the very near future. And if the Federal Reserve cuts interest rates, mortgage rates are likely to drop as well. I’m expecting that we’ll see further, though modest rate cuts in 2025 as the Federal Reserve eases us into more economic stability.
But I also think that we’re witnessing an inflated stock market in the wake of the re-election of President Donald Trump. And there’s a certain danger in building upon perception rather than fundamental growth and development. When artificial inflation meets the spike that we’re seeing in cryptocurrency plus stock market activity built on perception, there’s an underlying risk that the Federal Reserve isn’t likely to tolerate. And if we’ve learned anything from the Federal Reserve’s action post-pandemic, it’s that they’ll do whatever it takes to keep inflation in the mid-2% range.
While I still feel confident we’ll be seeing interest rates dropping on December 18 and well into 2025, this multitude of unusual factors could disrupt my prediction. Cutting rates in this unpredictable environment could serve to exacerbate asset bubbles. And, if that happens, I’m worried that we won’t see interest rates dropping much, if at all, in 2025.
Do Yourself the Favor of a Proactive Approach
So what can you do? I’d recommend resisting the temptation to bank on interest rates dropping because there is no guarantee it will actually happen. And with a wildly different presidential administration on its way in, there’s not exactly a clear, even path forward. In my expert opinion, a proactive approach is the best response to an uncertain future because you’re working with the resources you know for sure; the ones you have in the present. By locking in a plan now, you can get ahead of the changes and spare yourself unnecessary risks.
If you were already planning to buy or sell real estate or refinance your mortgage in 2025, hop on the phone with your trusted real estate agent sooner rather than later to develop an actionable path forward based on your specific situation. “Now” is the only time that’s certain.
After working with, and for, many different real estate firms, it became apparent to Harout that there was a major disconnect between what consumers needed/wanted and the service that was being provided to them. It was upon this realization that Harout founded and opened JohnHart Real Estate; and as the CEO/Principal Broker he has continued to break from the norm and redefine real estate with an insatiable appetite to give his clients the service and attention they deserve.
