KGCI: Real Estate on Air - Fed Update: Navigating Decisive Market Shifts and Housing Affordability in 2026

Episode Date: May 27, 2026

Summary:This episode provides a deep dive into the Federal Reserve's latest impact on the housing market as of early 2026. Host Josh explains why expected rate cuts were delayed and how the Fed's "stealth moves" are currently shaping mortgage rates and buyer demand. The discussion moves past the headlines to provide agents with a data-driven understanding of inflation, labor trends, and the voting structure of the FOMC. Agents will gain the tactical knowledge needed to explain complex interest rate movements to confused buyers and position themselves as authoritative experts in a volatile market.

And welcome to another edition of the nerdy agent podcast. I'm your host and your video producer of the day. Luke Pedersen with my brothers and Feltonner. It's Josh and AJ. We'll see how this goes. I'm the assistant video producer. We think we're recording, but we might not be. Am I assistant video producer or assistant to the had video producer?

Just to the video producer. So I was just curious how you guys ended up yesterday on March Madness in the first day because I ended up up $30. Oh, he's betting on things. That's right. How about your actual selections like the good old days? I've heard that most people, speaking of just like nerding out on numbers, right? Because I love numbers.

Most people that gamble on sports make money. Is that right or wrong? That's right, right? Draft Kings is actually cutting back on their commercials, I think. I hit, you guys, losing so much money. Listen to what I, listen to what I hit yesterday. A TV channel. So I had, I had Texas Tech, UCLA, Texas A&M, Michigan, and Drake.

The only one I got wrong last night was Kansas. And they blew it. They stunk. If Kansas had won, I would have been up $80. They stunk. A couple of old friends in there, though, Ferrell Payne on Texas A&M and Elijah Hawkins on Texas. And we got to watch Hunter Dickinson lose.

Hunter Dickinson lost. I was really bummed out to watch Elijah Hawkins. 40 minutes he played. He's great. It was really hard. He's really good. I was like, how do we not have him on our team? I know.

And we like plucked him out of nowhere to. It was crazy. It's called paying people. Yeah. How did you guys actually do, though? I don't know. I haven't even looked. I was 12 for 16.

We're in 46th place in the pool right now. I got 14th. What pool? The Delo pool. Oh, I'm not in that one this year. I got 14th. 14 out of 16th. Yeah, AJ's doing well.

He's looking good. I boycotted the Deelow pool because I was upset with the change in leadership. Oh, yeah. When I stopped running it, fell apart. Matt Dockon. Matt's doing a great job so far. He was doing a good job. No, he can email me a bunch of.

I love Matt Dock and shout out. Let's get into what actually matters, which, I mean, Mark, Mark, I was actually matter everything. It matters a lot. But today we're going to talk about the Fed meeting that happened. I believe it was two days ago today. So whenever this is coming out, probably about a week. And then some people got fired.

So we're going to discuss that as well. Just to start with that Fed meeting, because I think it will be a decently quick for those who don't remember the Fed meets quarterly every couple months. And they talk about what they're going to do with the overnight lending rate, and then they end up speaking and talking about where they think the economy is going. where they think their projection going, all of that ends up affecting how the secondary market makes decisions. And that kind of flows into what's going to happen with 30-year mortgage rates.

A couple days ago, they basically said they're not going to change anything. That is correct. They also talked about tariffs and the impact they could have on inflation. And you know what word they used? Transitory. Do you remember when they used transitory before? Transitory. Do you remember when they used it before? when they said, oh, all the supply chain stuff and pandemic stuff is just transitory, like the inflation's not going to go up. And then it went to nine. And they were very wrong. They said, this is just a brief blip, like, no big deal.

Don't look here. And then it went to nine. So they used the same word again. Maybe they're right the second time. But they said the first time they used it, they were incorrect. That's correct. The tariff stuff is so tricky because it changes every day, right? Like there's, it's clearly being used more as like a negotiation tax.

than like in anything else. So it's like, as long as you give me what I want, I'll take these tariffs away. But if everyone starts fighting back and forth with tariffs, there's almost no way inflation's not going to go up. Like zero, in the short term. Maybe long term you'll be able to bring production back, et cetera, whatever you want to do. A trade war is just not great probably for our international economy. And you're seeing problems. Everyone loses. Everyone else.

Everyone does lose. And the last time, you know, I know the president's touting the William McKinley, I believe, is his guy. he likes to talk about who famously, I think, did or attempted to replace taxes with tariffs. The external revenue system? Correct. But of course, when that was happening, there were no cars. So we didn't have roads. I don't know if we had public schools.

There's a lot of things that the government is now paying for. I actually listen to a fascinating podcast on what they're doing right now. And it'd be cool in this podcast sometime to go back and look at what Clinton did. because a lot of it is out of the same playbook of what they're doing now. It's just that the Clinton administration did go to Congress to get approval on most of the stuff that they did. This is a big difference. So the Fed basically came out and said they're going to hold tight in the foreseeable future probably as well. Two potential cuts this year was kind of the consensus.

But inflation is still up. They said, again, they said transitories. They said, we think that the higher inflation expectation that's out there, a good, depart is what he said, is coming from tariffs. But yeah, he definitely used the word transitory. I don't remember where it was, but it was in here. Yeah, it's a good word. I mean, basically it's just saying, like, this is just a blip on the radar. I mean, like, if truly, like, we figure out the trade stuff, they're going to have some repricing and things like that, but it doesn't necessarily lead to long-lasting inflation impacts. That's what CNBC's reporting says on it. That was kind of the

expectation was that they weren't going to raise or lower the overnight rate. I don't know what the expectation was going to be what they were going to say about future cuts or not. But I pulled up Mortgage News Daily. It's at 6.7. 6.71 today. It was probably 6.9 a couple days ago, wasn't it? Yeah. It has floated down. I'm going to move lower today probably as well, the 10 years off by a couple basis points. We are still running at about 250 over the 10 years. So 4.2 is the 10 year 6-7, Mortgage News Daily's got us at for 30-year fixed. So about 250. Again, we saw that go up to like around 300 right when the rates started going up at first, but really was like 150 back when I got into real estate. So definitely a different world. I think the Fed has also indicated at the

meeting. They did talk about mortgage-backed securities. I don't want to get this wrong. Like quantitative easing? Correct. And I think they're slowing down the rate of the sales. So that's sketches out slow slog to unload. Oh, that's, that's an older one. You know, the Fed strongly wants mortgages off of its balance sheet, but I think they were selling a lot of them. A lot of them. And I think they've decided, yep, Fed to shrink balance sheet at slower pace until debt ceiling deal is reached. So they decided to unwind the positions a little bit slower. until the Republicans and Democrats get together and decide what they're going to do with. And that could possibly be affecting that lower drive on the rate too, potentially?

It could be. I mean, presumably that is, there's less sellers selling mortgages if the Fed is not participating as much as they were. So then it would be easier for incoming sellers to find suitable buyers. But, yeah, I mean, that should impact or potentially compress that 10-year, 30-year-fix. Yeah, well, we've talked about with Powell historically too, right? So the high level, if you want to take all this conversation up to 30,000 feet is like the Fed looked around and said, hey, we're going to basically continue to just be patient and look at the data and see where things come in and be data driven, but we're not going to make any massive decisions right now.

It makes sense with the stock market kind of moving the way that it's been moving. Powell's always tried to minimize impact. And so when it seems like directions going one way, he kind of hedges on the other. side, right? So most of the tariff stuff people are kind of negative about. So he's going to use the word transitory to try to offset some of the concern and straddle the middle. So I'm not surprised by the decisions that were made. There's not indicators yet saying there's any sort of like major economic meltdown happen. Like there's nothing like that. So there's no reason for him to make any drastic changes. But, you know, as agents, it's important for us to know these things,

to understand them. There's a lot more moving and shaking going on right now in terms of the way politics are now intertwining with the things that affect us as interest rates and whatnot. And so it would probably be important for us to, you know, touch on the next thing, too. So somebody got fired and more exciting news. Well, I guess it depends. It depends exciting if you feel, but yeah. And not exciting. And in more, the Fed was a little just like whatever.

The same stuff's happening. Yeah, more. And then something got fired. Well, there's a lot of change going on specifically within the government agencies that control housing. So the guy in charge of the HUD and the folks underneath him, so there's the federal housing finance agency director, you know, both of them are very clearly working to align themselves with the agenda of the administration. A lot of that is around cutting what they feel is waste in different organizations within the federal administration. So they just fired

the head of Freddie Mac, the CEO, Diana Reed, and the head of human resources. for Freddie Mac, which the head of human resources is interesting one. It's a funny one. Well, it probably just says, like, we are not going to be that focused on human resources anymore. And so they're... Well, and they're probably not going to have that many humans to resource, right? They've already...

They're trying to wind down a lot of these different agencies. Yeah, and even HUD has been doing things like firing all temporary staff, their cancellation, they're canceling grants. There's a lot of changes happening, and I think they point to a couple things. One, we talked a while back about, you know, the desire to potentially privatize Fannie and Freddie. Now they started privatized. They went back into the federal hands when everything crashed. Then they are now being reconsidered.

So that would be a really interesting thing because that would drastically impact how the lending process works, how it's backstopped, and the impact interest rates. But they're also looking at a lot of these grants and things that the government's given out historically, primarily surrounding like low-income housing or affordable housing and, you know, stopping some. of those programs. So I think both of those things are important for us to keep our eyes on because they could have direct impacts to the world that we work in. It's fascinating. Yeah. And I think I'll just touch on quick because I did listen to that. The Daily is a great podcast. They have lots of really great stuff. And they had on basically the Elon Musk of the Bill Clinton administration. So she was, I can't recall her name, but she was in charge of a similar acronym. They had an acronym name for this agency, went through, fired a bunch of federal workers, changed a bunch of subsidies.

You know, she's like, it was, she said it was funny. You know, she's a Democrat, but just when she was going through it of like how much old school waste there was within the government, like one of them was they got rid of the tea party or the tea tasting board. There was a tea tasting board, which was basically formed because when United States became a country, they were worried that all the countries were going to send them all their bad tea. So they formed a board to taste the tea when it came over off the ships. And it still existed until the 1990s. What a sweet job.

There was, and then there was, my wife would love that job. She loves tea. And then get this. So then in the, yeah, I don't know what the, it was just one of these, like, you know, cool, catchy examples. But then there was another one that in the, during the Vietnam War, I want to say, it was very, very cold for the soldiers. so they did this massive subsidy on wool and something like wool

so they could make coats and warm clothing for the people in the military. But then when the war was over, they never got rid of it. And so all these wool manufacturers were just raking in profits because they were continuing to have these like tax benefits and things like that. And they got rid of that. And then it became this big conflict because all these farmers were like, what the heck, we were making all this money on this wool. So there's a lot of funny examples of it.

but she said, and I just looked it up, she said salaries are one way to reduce spending, but it does only account for 5% of the total spending for the country, for the government, I should say. It's like $336 billion is what Gemini just spit out for me. So it's still a long cry from the $2 trillion shortage that deficit we currently have. And we're spending $6.5 trillion and bringing in $4.5 trillion, I think is the rough numbers. And so they're trying to, you know, eat into that $2 trillion deficit. But even if they eliminated every single federal government worker, they would only get like 15% of the problem taken care of.

So there's other things that she was saying there's much more powerful things that they can and maybe will do that would have a greater impact like subsidies or like different types of things like that or through tariffs. Like that is one way they can bring in additional income. You know, if they're going to squeeze the expense gap, they can bring an additional income to try and eat away at that $2 trillion. Because I think, and I think all of us in our country would love it if we could have a government that is working effectively and doesn't have a deficit. It just seems like it's been a while and it's really gotten backwards. So it's interesting to see.

But you're right, not wrong. I mean, the privatization of Fannie and Freddie would be a really fascinating experiment to play out. Most smart lenders and people that I know have said that. they think rates would probably go up because the government does act, you know, in this conservatorship, they act as a little bit of a backstop for the whole program. Right. So we can, we don't need to dive into that the rest of the podcast. A privatization podcast, would be kind of fun.

We can talk about that history of Fannie and Freddie. Yeah, that'd be a good one. In case you want to know. I mean, more will happen probably between now and the next time. A lot's happening right now. Who is going to be the definite over number 10 or 10 or worse? seed that gets to the Sweet 16. Might be McNeese. I know you like Purdue.

McNeese is fun, but I think Purdue is going to mop-a-mom-mom. Can I tell you something funny? So McNeese finishes and they win and I look at me in Caitlin's brackets? Caitlin's got McNeese stayed in the Sweet 16. Oh, Will Wade? She knew. She's got him over Purdue. Well, he's a great color. Okay, so McNeese, I think I told Luke this yesterday, maybe not Josh. So Will Wade

had a lot of like improprieties, things like there was a FBI wiretapping scandal at LSU, all this kind of stuff. And he got fired. And he went went to McNeese State two years ago. Started wiring money to all the players. Well, it was legal then. So what ended up happening is they were, Josh, they were 11 and 23, I believe, was their record two years ago. Last year he came in, he had a 10-game suspension where they went 8 and 2 to serve after the LSU stuff.

Then he went 22 and 2 as a coach last year and they won the Southland Conference. This year they went 29 and 4, I think. And now he's getting the job at NC State. state. Yeah. So it's fascinating. They're already announcing that while the... Can you do that?

I think it leaked. And so then he just addressed it because they were like, what's the NC State thing? He's like, well, I'm not going to act like this is not a thing in line with it. No, he shouldn't.

My choice is the current home of future gophers coach. Colorado State. Colorado State. They've got the firepower to do it. You know who is so fun though? Because Drake's still my favorite story. Man, they're good. Four division two guys last year in their starting line up.

Top four scores and their top guys. scores like 20 a game. And that coach is probably headed to the Big Ten as well, because the rumors are that he is going to literally go Northwest Missouri State next year at Drake, and then he's going to get the job at Iowa next year is the rumor. You should take all those guys again? Probably going to take. Well, this Bennett Sturts is a junior.

Oh my gosh. The rest of that team was hard to watch, I'm going to be honest. He was good, though. Oh, man. He was the only reason anything was happening at the end of that game. Well, that's all we have this week on the Nerdy Agent podcast. And as always, remember, be better.