Stay the Course or Deploy Interest Rate Cuts in 2024?
The “shelter inflation” is 44.4% of the consumer price index, so it is the most significant component. Back in December, the 10-year yield had fallen from its peak of around 5% to 4.2% which should have driven mortgage rates less than 6%, but they did not.
Gary Keller said in a recent meeting that while the nation was not in recession, housing was in a recession. In most markets, including ours, inventory remains low, interest rates remain high over the last 5-year average, yet prices do not seem to be decreasing.
Some recent reports I have seen show rental rates declining, but in 2 markets that we are considering, we actually see them increasing.
Unsettled times require more diligent analysis. Interest rates certainly affect the individual consumer purchasing a home just like they affect the cashflow on a project a developer is considering. Finding that balance is becoming more difficult, but as we said, it requires more thorough analysis.