Rates on the Horizon
Interest rates are closely tied to economic indicators like the jobs report, which provides insight into the health of the labor market. If the upcoming jobs report on Friday, September 6th shows a slowdown in job growth or a rise in unemployment, the Federal Reserve may consider lowering interest rates to stimulate economic activity. Conversely, strong job growth could lead to higher rates as the Fed aims to control inflation.
While it’s challenging to predict the exact timing, if the report indicates weakening labor conditions, we might see rate cuts in the near future as part of the Fed’s efforts to support economic stability. The next Federal Open Market Committee (FOMC) meeting will be held on September 17-18, 2024. This is one of the key dates to see if the FED will make any announcements on rate drops.
Did you know?
Even a 1% Rate decrease will bring $5M NEW buyers into the market. We currently have only 18,000 Active Listings in the Phoenix Metro. With 2/3 of financed homes sitting with rates at 2-3%, it is uncertain whether the decrease in rates will drastically affect the supply however, the amount of demand will increase drastically.
What I would do if I was buying
I would not wait. The PHX market is relatively balanced right now with a slight lean towards a buyers market and sellers market in specific submarkets (EX: Slight Buyers Market in Scottsdale / Slight Sellers Market in Queen Creek).
If you have a strong likelihood of maintaining your financing ability for the next year, it would be advantageous to purchase while homes are sitting at a 6% YOY low (September 2024) and refinance in 6 months after the second anticipated December FED Rate Cut. The benefit to this approach is to secure a home at a potential discount, force the appreciation through the end of the year, and refinance to a lower rate in 6 months.
Please note: in order to refinance, you will need to still have healthy employment or similar financial status (credit score, income, Debt to Income Ratio, etc). If you plan to utilize this strategy, it is not time to quick your job and become a solopreneur or finance multiple cars.
