The Fed, Mortgage Rates, New Lawsuit From Buyers, WeWork Bankruptcy

In this week's episode of Real Estate Roadmap, we discuss the following:

(1) The Fed decided to keep its benchmark rate unchanged for now. The inflation rate is still coming down, the unemployment rate is still low even though it is inching up, and GDP growth has been steady. When asked whether or not rate cuts might be on the horizon, Jerome Powell's response was that they were still not convinced that their monetary policy is sufficiently restrictive to bring inflation down to their 2% target over time.

(2) Mortgage rates, which had previously been flirting with 8%, took a decent tumble on the heels of the Fed's press conference, now hovering in the 7.4% range.

(3) The U.S. housing market is on pace to finish 2023 with around 4.1 million home sales, which would be fewer transactions than 2008. There were over 6 million sales in 2021, so this would represent about a 30% decline in transactions over the last two years. However, there are early indicators that we may have hit bottom, and 2024 could bring more transactions as long as mortgage rates don't derail a recovery. Currently, we're seeing a more shallow seasonal decline in the number of weekly new listings and pending contracts than this time last year, which is encouraging news.

(4) A new lawsuit was filed last week, seeking class-action status, this time brought by a group of homebuyers. The claims are similar to the other lawsuits in the headlines, alleging collusion between NAR and a handful of national franchise brokerages. However, these plaintiffs are claiming that inflated buyer broker commissions damaged them by causing home prices to be inflated.

(5) WeWork, a commercial real estate company focused on shared coworking space, filed for Chapter 11 bankruptcy. Previously valued as high as $47 Billion in 2019, last week's the company's market cap had slid all the way down to $45 Million. The stock price has cratered over 98% just since the beginning of this year.

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Real Estate Roadmap is hosted by Michael Smith, CEO of Bluefield, LLC.

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