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Short-Term Chatter-Memory vs. Long-Term Intelligence

The past several months of taking in financial market predictions has been extremely turbulent and has shifted so many times it truly can cause whiplash. It is not surprising the consumer is so confused. In the fourth quarter of 2023, the 'world' told us to expect multiple interest rate cuts in 2024 as inflation subsided and the economy remained solid. The 10-year dipped below 4% and mortgage interest rates dipped too. Real estate markets climbed.


Then in the first quarter of 2024 this narrative shifted to fewer cuts as many saw inflation remaining 'sticky'. The 10-year Treasury rose again above 4%. As it continued to rise, predictions of zero cuts emerged. Today, things are different again with downward revised GDP growth figures for the first quarter, fewer job postings, oil prices notably down (OPEC increasing production!), massive retail price cuts, and the 10-year Treasury dipping too.....and now there is chatter of Fed cuts coming again, maybe multiples.


The equity markets and corporate profits hit historic high's, even when we were told inflation was eroding all gains. Some politicians tell us our economy is a total disaster, while others say it's just fine: Then again it's an election year, so these vastly varying narratives are to be expected. We read articles about massive surges in inventory, yet many buyers cannot find what they are looking for. Bitcoin's value has doubled in 6 months.


These narratives and predictions that seem to change as much as the weather impact perceptions: 
  •  Most people believe violent crime is at historically high levels, yet the violent crime rate fell 49% between 1993 and 2022, with large decreases in the rates of robbery (-74%), aggravated assault (-39%) and murder/nonnegligent manslaughter (-34%). 
  • Most people think oil is at an all time high, yet its price is about the same as it was in April 2006 and July 2018...and about 8 of the past 18 years.
  •  Most people believe higher inflation is something new, yet US inflation has been 2% or lower for only 26% of the past 50 years.
  • Most believe mortgage rates are at an extreme high, yet the 30-year fixed rate mortgage has been 6% or lower for about a third of the past 50 years.
  • Recent headlines have many believing home values in Florida are plummeting and inventory is surging: yes, some areas are seeing higher inventories and lower prices, after 4 years of soaring prices and extremely low inventories.

What is better for real estate:  lower rates and a weaker economy or higher rates and a strong economy? Higher inventory or lower inventory? Multiple bids or no bids? Lower prices with more transactions or higher prices with fewer transactions? I guess we will hear arguments for and against both scenarios as time goes on, and maybe all the above is a reminder not to conflate news cycles with much longer term economic cycles viewed in the rearview mirror:  one is factual and data-centric, and the other simply keeps us engaged to help fuel ratings.


Often the reality of markets lies somewhere between the two extreme narratives that generate the headlines. It is for this reason that professional real estate advisors help their clients observe markets over the long term too, helping them better understand all the chatter and noise and shifting narratives with data, facts and substantive insights.


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Ken interprets market data, staying in constant communication and offering valuable insight that then translates into an informed decision.

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