Epic Real Estate Investing - Housing Market Shakeup: Accelerated Rate Cuts Ahead | Your Critical Action Plan | 1360

Episode Date: October 5, 2024

Join us as the speaker delves deep into the potential implications of a half-point Federal Reserve rate cut on the housing market and the broader economy. This insightful discussion raises crucial questions about whether we are witnessing a covert bailout orchestrated by the Federal Reserve to stabilize economic conditions. The speaker begins by assessing current economic indicators, providing a comprehensive overview of how these factors interplay with previous rate changes. This analysis will illuminate predictions for housing prices, giving you a clearer picture of what to expect in the near future. By drawing historical comparisons to past financial crises, the speaker highlights striking similarities with today’s economic landscape, helping us understand the potential risks and opportunities that lie ahead. For real estate investors, this presentation is particularly valuable. The speaker offers actionable strategies for leveraging the anticipated changes, covering a range of topics including refinancing options, timing for property sales, and exploring fix-and-flip opportunities. The focus is on being proactive and adaptable in an evolving market, ensuring that you are well-prepared to make informed decisions. Moreover, the discussion highlights a community program designed to facilitate investment opportunities during these uncertain times. This initiative not only aims to support individual investors but also fosters a sense of community resilience. By emphasizing the importance of strategic planning and adaptability, the speaker equips you with the tools needed to navigate the complexities of the housing market effectively. Don’t miss this opportunity to gain insights that could shape your investment strategy and secure your financial future! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Hey, strap in. It's time for the epic real estate investing show. We'll be your guides as we navigate the housing market, the landscape of creative financing strategies, and everything you need to swap that office chair for a beach chair. If you're looking for some one-on-one help, meet us at rei-aise.com. Let's go, let's go, let's go, let's go, let's go, let's go.

Let's go. Is the housing market on track for a bailout? The Fed just made historical drop in rates by a half point, and it didn't move the needle. As existing home sales, pending sales, fall to lowest level since pandemic start, as house hunters wait for mortgage rates to drop further. So is the Fed going to accelerate rate cuts further to bail out the frozen real estate market? Well, let's dive into the compelling facts and what there is for you to do to get on the right side of this market shakeup. As of right now, there's about a 15.

percent chance. Well, according to the CME Fed watch tool, there's a 100% chance that there will be another rate cut when the Fed meets again in November. Specifically, there's a 46.7% chance it will be another half point cut. And this is a big deal because the last Federal Reserve rate cut was significant for a few reasons and should cause you to pause and think about what could really be going on. First, the Fed hiked rates super fast to fight inflation. Then suddenly, change their minds and cut them. This quick flip-flop isn't something you see every day from them. Second, they cut rates even though inflation was just starting to calm down. Usually, they'd only do this if the economy was in trouble, not when things are still cooling off. Third, jobs were still

pretty good when they cut rates. Normally, they'd wait until more people were out of work, but this time they jumped the gun to avoid future problems, I guess. Four, everyone saw the rate cut coming, but it still raised some eyebrows. People weren't sure if the Fed knew something that we didn't, or if they were just sticking to their plan. And the fifth thing is, this rate cut happened while the whole world economy is in kind of a mess right now. I mean, with all of the global drama going on, it made for a pretty unusual situation. This big decision by the Fed sets a brand new trajectory that not only confirms the Federal Reserve's belief that inflation is under control, but is about to affect everything from the stock market to the housing market, the national debt,

and even how much you earn in your savings account. For example, I just got an email this weekend from my bank that they dropped the interest rate in my savings account by a half point. On the bright side, though, if you have a $680 credit score or better with no collections or bankruptcies in the last seven years, Chase has a program just for real estate investors and small business owners where they're offering up to $150,000 at $1,000. at zero percent interest. No fees either. Crazy, right? Details at no-cost capital.com. Now, if the Fed were to make another cut by a half point, and as I showed you, it's certainly on

the table, could there be something going on that we don't know? A rate cut like that could signal several important things about the state of the economy based on historical patterns, and it's not a reach to consider this is a federal bailout in disguise. Here's what it could mean. First, that there's big trouble brewing. I mean, a half-point rate cut isn't your everyday move. It's the Fed's way of saying, whoa, something's up. Think back to the dot-com crash, the 2008 meltdown, or when COVID hit. The Fed only swings this big when they're trying to dodge a bullet.

And then two rate cuts of this size in a row, could they be trying to dodge a ballistic missile? What are they seeing that we're not? A recession lurking around the corner? The housing market on thin ice? I mean, it's enough to make you wonder if they're secretly trying to prop things up before they fall apart. Two, it also just could mean that they're changing their tune. I mean, if the Fed goes for a big cut after hiking rates, it's like they're admitting they might have overdone it. Maybe they're realizing all those rate hikes weren't such a hot idea for the housing market after all.

Are they trying to hit the brakes on a potential crash without actually saying so? Or it could mean that the Fed has the inflation jitters. Usually, a cut this size means inflation's cooling off way too fast, maybe even heading into deflation territory. But here's the kicker. In the housing market, deflation could spell disaster. Are they trying to keep home prices from taking a nose die? It's starting to smell a lot like a sneaky bailout.

Four, it could mean that the job market has the wobbles. I mean, a big rate cut often means the job markets look and shaky. But here's the thing. The housing market and jobs are totally linked. If people start losing their jobs, those mortgage payments can. get a whole lot harder to make? Is the Fed trying to keep the dominoes from falling? Or it could just mean market panic prevention. Because sometimes the Fed pulls out the big guns to keep the stock market from freaking out. But let's connect the dots. A stock market crash could seriously

mess with people's ability to buy homes or keep up with their mortgages. Are they just trying to keep the whole house of cards from coming tumbling down? Or it could be recession dodgeball. I mean, a hefty rate cut could be the Fed's way of trying to sidestep a recession before it hits. But here's the thought. What if they're actually trying to soft land the housing market without causing a panic? It's like they're playing economic jenga, and the housing market is that wobbly piece that they're trying not to disturb. And then what about maybe a global domino effect? I mean, the Fed might be eyeing trouble overseas and thinking, hey, we better batten down the hatches. But in today's interconnected world, a global economic hiccup could send shockwaves through our housing market.

Are they secretly trying to cushion the blow before it hits home? These are all possibilities, but are they probabilities? Is this all just routine-fed business? Or are we witnessing a covert operation to keep the housing market afloat? It's enough to make you wonder what's really going on behind those closed doors at the Federal Reserve. But unless you've got a friend inside those closed doors, all we can do is play with the cards that were dealt publicly. So first, let's look at the cards on the table. The median home price has surged 46% over five years, with a 3.1% year.

over-year increase. However, examining month-to-month data from July to August, we do notice a slight dip in prices. Some are saying that this signals the beginning of the market collapse. But I'd argue it's a seasonal fluctuation. I mean, we've seen this pattern this time of year in 2021 and 22 and 23, and we're seeing it again here in 24. Some say, well, actually a lot of people are saying a housing market crash is imminent. Recycling the same prediction since 2021. I mean, rich dad himself has been predicting a crash since 2014. I suppose eventually, they'll all be right, but we're nearing the end of 2024 and their forecasts haven't materialized. Now, let's look at the broader economic picture. The recent inflation report shows that consumer

prices rose by only 2% in August, the lowest level since February 2021. This puts the 12-month inflation rate at just 2.5%. With energy prices being one of the main factors, having fallen 4%. Used cars and trucks have declined 10%, new vehicles are down 1.2%, and oil is down 12.1% over a year. The Federal Reserve cut the benchmark rate by a significant half point from 5.5 to 5. This move typically leads to lower mortgage rates, though it's not guaranteed. Routers reported mortgage rates hit a two-year low of 6.15%. However, it's important to note that a 25 or 50 basis point rate cut might not make a huge difference in the housing market immediately. It's said that a 1% decrease in mortgage rates would allow an additional 5 million buyers to qualify.

But we're only seeing a reduction from 6.47% to about 6.3% with this recent cut. Examining the Fed's projections in their SEP, their summary of economic projections, they anticipate further cuts, a half point more this year, 1% in 2025 and another half in 2006. However, market expectations suggest even deeper cuts with a 70% chance. chance of cuts exceeding a half percent this year alone. The Fed's goal is to find the right balance, cutting rates enough to keep the economy afloat, but not so much that it floods the market with excess demand and sends prices back up. Regarding home prices, recent reports show that the share of

available listings that saw a price cut in July, it rose 18.9%, causing the median price to fall from $445,000 to $439. This is due to higher than expected mortgage rates causing less buyer demand, and many potential buyers, they're waiting on the sidelines for rates to come down further. Looking ahead, various organizations have different predictions for home prices. The Mortgage Bankers Association believes prices will increase another 2.9% in 2025. Fannie Mae predicts a 3% rise, and the National Association of Realtors estimates a 2% increase. The rental market is seeing interesting trends, too. One in three property managers offered concessions on rents amid a glut of supply,

with multifamily construction reaching record levels. However, overall rental prices are still up 3.4% from a year ago. In terms of the stock market, historically, Fed rate cuts often precede market downturns. However, this isn't because of the cuts themselves, but rather the economic conditions that necessitated them. The market's reaction will likely depend on whether we see a recession and how much of the rate cut was already priced in. Interestingly, the cryptocurrency market, particularly Bitcoin, is also being affected. by these economic shifts. Both major U.S. presidential candidates have expressed support for cryptocurrency, potentially making a significant policy point in the upcoming election. And Jerome Powell reiterated that

their fight against inflation is working. Progress is being made and restrictive policy isn't needed to such a large extent anymore. The Fed's projections suggest we'll see a series of rate cuts over the next few months and years as they anticipate GDP slowing down and unemployment rising. Overall, this rate cut confirms that the Fed believes inflation is under control, and they're now focused on preventing a recession. For the housing market, this means we're likely to see a period of adjustment. Buyers may face the choice of buying at higher rates with less competition now or waiting for lower rates, but potentially facing more competition later. Remember, economic changes, they take time to materialize fully, but there's power in knowing this because this Federal Reserve rate cut, and the promise of more to come very soon opens up several opportunities for real estate investors.

Here's the real talk. Here are some actionable steps that you can consider taking right now. One is refinancing. Time to play the Fed's game. I mean, if you've been sitting on the fence, it's time to jump off. When your golden ticket to lower rates, it's coming in hot. Refining could put extra cash in your pocket every month via a lower mortgage payment in both your home and your income properties. And maybe even you can take some cash out to lock in a deal or two before the housing market gets its inevitable boost.

Second thing is to maybe dip your toe in the selling pool. I mean, if you've been thinking of selling any property that you own, now's the time to maybe start testing the waters. I mean, with rates dropping, buyers might suddenly find your property irresistible. But watch closely. If prices start climbing faster than expected, it could be a sign of the undercover bailout at work. And there could be a little bit of a wave for you to ride, so you might want to hold up. for a second. Three, go big or go home. I mean, if you manage to sell, consider leveling up. Trade those single family homes for nicer ones or better performing ones or ones with greater

upside potential. The real point here is, if you do take cash out of your properties by either refinancing or selling, make sure you got a better plan for that money to work harder for you than it is right now. And then number four, fix and flips. Lower rates could make fix and flips sexy again. In fact, historically speaking, this is the perfect time to start planning flips. And that could be fixing and flipping them on your own or wholesaling to other fix and flippers. If this stealth bailout plays out as they've laid out, property values are going to jump. This is the beginning of the wave if you're up for bigger paydays. I'm getting a small group of aspiring investors together this month to take advantage of this market timing,

where I'll be kicking off their marketing, I'll be helping them field their leads, taking those calls, even be getting them some funding to launch their business. If you'd like to join us, go to Epicapprentice.com for the detail. Number five, think outside the box. With the housing market still a bit in freeze mode, don't abandon your creative abilities when it comes to seller financing and subject to acquisitions. And if the Fed keeps cutting rates, it could be the smoking gun that proves the bailout theory. And each decision will open up new opportunities and reveal the bigger picture. Now, I'm not expecting the sky to fall tomorrow, not by any means. I'm not talking about 2025 hyperinflation or anything like that, but they are turning the money printer back on and

cutting rates, which spells inflation. It's all inflationary. So, I mean, are they making things worse? Yeah, you bet they are. The real question is how much worse and how fast. The bottom line is, we're in for a wild ride. Whether you're looking to refinance, buy, or just trying to make sense of this circus, keep your eyes peeled, and your BS detector on high. The game is changing. Moves are being made, and you don't want to be the last one to figure it out. So stay sharp, stay informed, and maybe, just maybe, you'll come out on top of whatever this economic roller coaster throws at us next. Owners of essential businesses and real estate typically come out on top when everything bursts. They might experience the same little speed bump that everybody else experiences, but in the end,

they come out on top. I mean, we're playing 4D chess here. These moves aren't just about making a quick buck. They're about positioning yourself for whatever's coming down the pike, whether it's a secret bailout or just market cycles. Staying sharp and adaptable, that's the name of the game. As always, don't go it alone. Get some expert eyes on your strategy before you make any big moves. The real estate game, like I said, it's changing and you want to be ahead of the curve, not behind it. So whether you join us at epicapprentice.com or not, stay adaptable, keep learning, and be ready to adjust your strategies as the market evolves. Be willing to unlearn what you think you know

and learn what you don't know that you don't know. Like the rich people's secret to using debt and taxes to build wealth. Whether you're a seasoned investor or just starting out, there are always opportunities in real estate if you know where to look and how to leverage them. I'll see you next time. Take care. And that wraps up the epic show. If you found this episode valuable, who else do you know that might too? There's a really good chance you know someone else who would.

and when their name comes to mind, please share it with them and ask them to click the subscribe button when they get here and I'll take great care of them. God loves you and so do I. Health, peace, blessings, and success to you. I'm Matt Terrio. Living the dream. Yeah, yeah, we got the cash flow.

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