Epic Real Estate Investing - The September 2024 Rate Cut Could Shatter Your Dreams Recession Odds Surging | 1337

Episode Date: August 28, 2024

Are we on the brink of a new economic twist? In this riveting episode, we dive into the Federal Reserve's anticipated interest rate cuts and unravel their complex implications. Historically, such rate cuts have often signaled looming recessions, but the current economic climate is anything but ordinary. With rising unemployment and dwindling savings, the stakes are high. Yet, history also shows us exceptions like the mid-'90s, where rate cuts didn't lead to downturns. Join us as we explore how technological advancements and smart policy adjustments might reshape traditional patterns. We’ll also dissect the housing market, revealing potential opportunities in areas with booming job growth.  Discover how liquidity and strategic planning can help you navigate these turbulent times and seize emerging prospects. Hit play and stay ahead of the curve! 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-i-a's.com. Let's go, let's go, let's go, let's go, let's go, let's go.

Let's go. Have you heard that the Federal Reserve is prepared? comparing to cut interest rates in September. Many people are very hopeful, thinking that lower rates will be the catalyst that revives the housing market and boost stock prices. But here's the gap. Historical data tells us a much darker story that's causing many to panic, contemplating selling everything and getting out of the markets completely.

And here's why. Out of the last 15 times the Fed cut rates, 11 of those cycles ended in a recession. And when a recession hits, home prices tend to plummet, unemployment skyrockets and the financial outlook for everyday investors takes a nose die. What's even more concerning is that this time could be worse. Right now, unemployment is surging at a rate we haven't seen in decades of 21% year over year. The debt-to-GDP ratio is at a record high of 123% and Americans are saving at near-record-low levels. When you combine these factors, the warning signs are flashing brighter than ever.

Even as mortgage rates drop slightly, fire demand continues. to shrink, signaling deeper trouble ahead. If you're relying on rate cuts to save the housing market, you could be setting yourself up for disappointment and financial stress. There are definitely two sides to the story, and if any of this has you scratching your head or even worry, you're not alone. With all the noise about recessions, crashing home prices, and skyrocketing unemployment, it's easy to feel paralyzed. But what if all this fear is keeping you from seeing the opportunities that are right under your nose? I'm going to break down what the September, 2024 rate cut really means for you, whether you're an investor, a home buyer, or just trying to

protect your money in these uncertain times. It is true that 11 out of the last 15 rate cuts led to a recession within six months. That stat, it's getting thrown around everywhere, and for good reason, it is a red flag, but focusing only on that statistic paints an incomplete picture. If you're constantly bombarded by doom and gloom headlines, it's easy to miss the bigger picture. The fear-driven narrative might have already cost you thousands by keeping you on. on the sidelines, while the market continues to offer these opportunities. But history also shows

us that not every rate cut leads to a recession. In 1995 and 98, both times the Fed cut rates, and instead of a crash, we saw a strong recovery. So what's different this time? Well, the labor market is still resilient, and GDP growth, while modest, remains positive. These factors suggest that a full-blown economic meltdown isn't a foregone conclusion. First thing, economic cycles don't always predict the future. While historical data can offer insights, using past economic cycles as the primary predictor of future outcomes, that can be misleading. The world today is vastly different than it was during past recession. Technological advancements, global trade dynamics, and government intervention capabilities have all evolved significantly. For example, in 2020,

many analysts predicted a prolonged recession due to the COVID-19 pandemic, yet swift and unprecedented and government stimulus measures prevented a recession. Maybe it created some different challenges, yet the worst scenario was avoided. Today's economy operates in a more interconnected and adaptive environment. Central banks have learned from past mistakes leading to more nuanced and targeted approaches to monetary policy. The global response to inflation in 2022 and 23 involving both rate hikes and fiscal adjustments highlights how quickly economic strategies can shift in real time. Furthermore, comparisons to past rate cutting. cycles failed to consider the rise of digital assets, global e-commerce, and other modern economic

drivers that didn't exist in previous eras. These new factors create additional layers of resilience, making direct comparisons between today and the past, incomplete. Ignoring these modern influences and sticking to historical data alone, risks missing the unique opportunities that this evolving economic landscape presents. Instead of relying solely on old playbooks, forward-looking strategies focused on real-time data and adaptive measures are more reliable in today's market. Second thing, a soft landing is still on the table. The idea that rate cuts inevitably lead to recessions is an over- simplification. Historically, there are several instances where rate cuts help stabilize the economy instead of triggering a downturn. For instance, in 95 and 98, like I mentioned,

the Federal Reserve's rate cuts were followed by continued economic growth rather than a recession. During these periods, the Fed was proactive, using rate cuts as a preventative measure, than a reaction to severe economic distress. This proactive approach played a significant role in avoiding economic downturn. In the current situation, inflation is moderating. Supply chains are stabilizing, and GDP growth remains steady at around 2.6%. Unlike past recessionary periods, today's economic indicators are not universally negative. Jerome Powell's strategy of prioritizing full employment while addressing inflation signals and intent to engineer a soft landing, a delicate a delicate balance that, while challenging, is achievable.

Moreover, today's labor market, though softening, remains resilient. Unemployment is only modestly up, and wage growth is still positive in many sectors. This scenario contrasts sharply with past recessions where severe job losses and wage cuts triggered economic spirals. While there's no guarantee, the unique combination of factors at place suggest that a soft landing is still very much on the table. Ignoring this potential outcome could lead to missed opportunities in real estate and other markets. Third thing, a buyer's market is emerging in real estate.

While some argue that declining buyer demand signals an impending housing crash, this perspective overlooks the broader context. Yes, mortgage applications are down a bit, but this decline also signals pent-up demand. As mortgage rates stabilize or decrease, sideline buyers, those who were previously priced out or hesitant due to high rates, are more likely to re-enter the market, and they likely will. This has historically been the case following periods of rate volatility. We're already seeing indicators of a potential buyer's market. Inventory levels are creeping up in many markets, giving buyers more negotiating power,

yet creeping down in others, giving some support to property values. Sellers that have been on the market who have held out for higher prices, if they've got to sell, they may soon have to lower expectations, presenting better opportunities for investors. Additionally, while national averages show slowing demand, real estate is highly local. In many growing cities and regions with strong job markets, demand remains robust, and prices continue to appreciate. Investors who focus on these pockets of growth can benefit from appreciation even in a broader downtrend.

Think of this like a wave, while the tide may be temporarily out. Those who position themselves early can ride the wave back up as conditions improve. For real estate investors, this means staying liquid, actively scouting undervalued properties, and being ready to strike when others hesitate. Those who understand the cyclical nature of real estate and the nuances of local markets will be the ones capitalizing when demand rebounds. The fear-driven narrative overlooks the buying opportunities that arise when others are too focused on short-term risks.

But that doesn't mean we can ignore the risks. Unemployment is indeed ticking up, and household savings are at record lows. The key is understanding where the real opportunities lie during this uncertainty. Here's where smart investors can get ahead. The first opportunity lies in the real estate market. While national headlines scream about falling demand, real estate is hyperlocal, as I mentioned. Certain regions with stable job markets and population growth are still seeing price appreciation. And overall, the country has more people than there are houses for sale.

Dips and prices are very likely temporary. And that will create opportunities for long-term buy. and hold investors. The negative headlines, however, have sellers starting to get nervous, which means you can negotiate better deals as competition thins out. Next, don't overlook liquidity. Being liquid in times like these gives you the power to jump on opportunities others are too scared to take. Cash buyers and those with access to quick financing will be in a prime position to pick up properties at a discount once the dust settles. If you have a 680 credit score, No collections and no bankruptcies in the last seven years, Chase has a program for real estate investors and business owners where they're providing zero percent capital up to $150,000.

This could put you in a position to seize opportunities quickly when they appear. You can get the details at no-costcapital.com. Now, think long term. This isn't the market for quick flips. Focus on buy and hold strategies where steady cash flow and gradual appreciation are key. The long game is where real wealth is built anyway, even during uncertain times. Now, you may be thinking, but isn't this just another fear-based prediction? Well, let's be clear.

Fear sells, and it's true that many channels focus exclusively on the worst-case scenarios to rack up their views. But here, it's all about balanced perspectives. Yes, we need to acknowledge the risks, but we also need to see the opportunities that those risks create. The truth is, the markets are complex, and there's never a one-size-fits-all answer. That's why it's crucial to stay informed and flexible, ready to act when the time is right. And truthfully, it's always right somewhere.

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. You didn't know home for us, we got the cash flow. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.