What effect will the Feds rate hikes have on the real estate market? We are coming into fall of 2018 which marks the 10 year anniversary of the 2008 housing crisis. The only thing that “saved” the economy from a total meltdown was the stimulus or bailout package. A lot of taxpayers were pissed off to know that these banks took risks they shouldn’t have and gave them a pass. That is not the way capitalism is supposed to work and that is not the way America is supposed to work.
The mistakes are being repeated. The Feds have kept interest rates artificially low for too long. Furthermore, the government brought back Freddy Mac and Fannie Mae from the dead. They brought back all these government insured loan programs that caused all the problems.
Here we are 10 years later and what have we learned? Did the government and the federal reserve learn anything from that financial crisis? Apparently they haven’t learned anything at all. In fact instead of fixing the economy, they made it 10 times worse.
Recessions are like withdraws from a heroin addict that is trying to quit. The withdraws may be painful but the heroin addict must go through it to cure his/her addiction. The United States economy is like a heroin addict but instead of heroin, it’s drug of choice is money that the federal reserve prints out of thin air.
President Trump continues his “Trade War” and is contantly bragging about how well the economy is doing. He is always boasting about how the stock market continues to hit record highs.
Is the Bull Running Out of Steam?
It is just a matter of time until this bull runs out of steam. By bull I mean the “bull” stock market. Back in April, the bull shattered records as the longest bull market in stock market history according to MarketWatch.
The Feds announced earlier this year that they would be raising interest rates throughout 2018 into 2019. On Tuesday, the Feds announced another quarter-percentage-point increase in interest rates from 2 to 2.25%. It is expected that another quarter-percent rate hike will occur in December.
The affect this will have on the real estate market will be noticed. Home sales will continue to trend downward as more and more people can’t afford to buy a house. I believe we are near the top or at the peak in most markets. Real estate markets will go from seller’s markets into buyer’s markets.
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