Feds Cut Rates Again - Predictions for New Office

[Thomas McPherson]

Hey all, 

Feds cut rates by a quarter point today.  Rate cuts tend to boost buyer affordability, but with current home prices, are we really going to see that kind of relief in cash flow anytime soon?

[Connor Hibbs]

I think there's a good chance that we will see little movement from the FED to see how the economy reacts to their last cuts and to see how the incumbent president's policies impact the country. My personal opinion is that rates will go down slightly with the recent rate drop and stay there until around March 2025. From there likely a short spike due to the market being more reserved as the policy starts to take hold and lenders opting to raise rates a bit to be on the safe side while the policy settles itself in the new economic environment. I'd predict that by the start of the third quarter next year the FED will have opted to lower by another 25 or 50bps and rates will truly start going down. Cutting down on gov't spending and the pulling jobs back into the US should help offset some of the tariffs, but it will come down to which items exactly do get tariffs put on them and to what degree the tariffs are (10%/20%/50%).

Overall, my guess is that rates will go down for early next year, rise during the middle quarter-third of the year, then fall slowly afterwards. It will certainly be an interesting year though.