Hi y’all! Welcome to a special edition of Selling Austin -
🚨 WHAT THE RATE CUT MEANS FOR YOU🚨

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WHAT'S INSIDE

• 🔢 THE DATA

  • ❓️ WHAT IS HAPPENING

  • 🏡 WHAT THIS MEANS FOR MORTGAGES

  • 💰️ WHAT THIS MEANS FOR THE HOUSING MARKET

  • 🫵 WHAT THIS MEANS FOR YOU

• 🤤 HOUSE WORTH DROOLING OVER

🔢 THE DATA

I know you’re busy - let’s make this simple:

❓️ WHAT IS HAPPENING

Alright, alright, alright…they finally did it. By now you might have heard:

THE FED CUT THE RATE BY 50 BASIS POINTS ON 9/18.

Right, right…and that means what exactly?

🥤Let’s take a quick refresher:
The Federal Reserve does not directly affect mortgage rates. They influence them by changing the interest rate that banks charge each other for loans. This impacts the rate at which banks can lend to consumers through mortgages, auto loans etc.

Great - onwards!

This is the first cut in 4 years. The Fed cut rates because they are confident that inflation is coming down towards their 2% goal (post-pandemic inflation peaked to 8.9% - yikes).

I constantly hear about a recession coming - is that still happening?

The Fed has “growing confidence” that it can avoid a recession with this rate cut. They’re keeping a close eye on a recent increase in unemployment - but they feel the economy is strong for now.

🏡 WHAT THIS MEANS FOR MORTGAGES

So, way lower rates right ??

This rate cut is unlikely to make a huge difference. Here’s why:

• Just the expectation of the Fed cutting rates already lowered 30-year mortgages to 6.2% (lowest since Feb 2023)

  • 🥤 Refresher: Rates bottomed below 3% for a 30-year mortgage during the pandemic and peaked to 8% last year

• Senior Economists at Wells Fargo think mortgage rates will drop “marginally” after Wednesday’s announcement

  • They predict 5.5% for a 30-year mortgage by the end of 2025

💰️ WHAT THIS MEANS FOR THE HOUSING MARKET

Are things going to explode again?

Unlikely - here’s why:

• Seasonality says that the housing market will slow down in the fall - this cut may result in additional transactions but not enough to meaningfully swing the pendulum

• Housing activity historically decreases during an election month

• Many homeowners will still have a “lock-in effect” (they don’t want to sell or buy because they can’t beat their current rates)

You will see more houses being built. Lower construction loan costs = increase in new builds (especially from smaller/boutique builders)

Phew, that was a lot. Here’s your TLDR:

🫵 WHAT THIS MEANS FOR YOU

• Unlikely we will see a big change in the housing market

• People who were not in the market at all won’t be jumping in after this rate cut

• This might be positive nudge for people actively in the market

Read more: here, here, here and here

🤤 HOUSE WORTH DROOLING OVER

We worked hard with that data section - let’s cool off with this Tuscan inspired retreat.

If you felt bad that it went under contract a few weeks ago, fear not. It’s back in all its glory.

Yours for $9,999,000

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