If you’re a real estate investor, you need to sit up and pay attention to what went down at the recent Federal Reserve meeting. Trust me, this one’s a game-changer.
The Fed’s Stance: “Higher for Longer”
First off, the Fed decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. They’re also reducing their holdings of Treasury securities and agency debt. The Committee is strongly committed to returning inflation to its 2 percent objective. This “Higher for longer” stance has sent ripples through the bond market.
What This Means for You
Rates are on the rise! Why? Because the 10-year and 5-year treasury yields hit 15-year highs. These benchmarks are what DSCR and homeowner rates are tied to. So, what’s my advice? BE CAUTIOUS! I’m not one to fearmonger, but I think mortgage rates could run past 8%, and the DSCR rates could go higher. We might be heading into a dark winter financially.
Expert Opinions: Rick Sharga & Daren Blomquist
Yesterday, I had the pleasure of interviewing two industry experts: Rick Sharga and Daren Blomquist. Rick is optimistic about mortgage rates and market stability. He advises investors to focus on people who need to sell their properties, like those going through divorces or job losses. Daren, on the other hand, brings up the possibility of a double dip in pricing and advises caution. He emphasizes the importance of data and suggests using platforms like auction.com to get valuable data and make informed decisions. These interviews will be available on the Uncontested Investing Show soon!
- Mortgage Rates: Both Rick and Daren agree that rates will be a significant factor in investment decisions. Rick sees them coming down gradually, while Daren advises caution.
- Market Stability: Rick doesn’t foresee a housing market crash, but Daren warns of a possible double dip in pricing.
- Investment Strategies: Rick suggests focusing on distressed sellers, while Daren advises looking at regional data and being cautious in bidding.
- Insurance and Taxes: Rick warns that insurance rates are doubling or even tripling in some cases. Property taxes are also on the rise, and investors need to factor these into their models.
Your Game Plan
- Stay Informed: Keep an eye on the Fed’s moves and how they impact mortgage rates.
- Be Cautious: Don’t jump into investments without doing your homework. Use reliable data to guide your decisions.
- Adapt Your Strategy: Given the current market conditions, short and simple rules the day. Stick to the basics and stay agile.
Opportunity often follows chaos, but you’ve got to navigate the storm first. Stay tuned, stay informed, and as always, let’s make some smart moves out there.
Note: Always do your own due diligence before making any investment decisions.
Feel free to share your thoughts or questions in the comments below. Let’s navigate these choppy waters together.