The Great News Out of this Week's Fed Meeting and the Impact of the NAR Settlement

The Weekly Recap

Good morning! It was Fed week and Jerome Powell made markets incredibly happy by confirming that there will be three rate cuts and 75bps of total drops this year as they held rates steady. The bank of Switzerland cut rates which hopefully means the rest of the world is not too far behind. Homebuilder optimism is at an 8 month high, existing home sales surged 10% in February. The Reddit IPO took off, and Elon Musk takes subscription Ketamine which he advises would be a bad idea to stop taking since it’s in investors best interests.

The Great News Out of this Week’s Fed Meeting and the Impact of the NAR Ruling

Jerome Powell this week took an unusually candid and ‘goldilocks’ approach to the market place and rate environment following the Fed meeting this week. Confirming that we will see three total rate cuts for a total rate decrease of 75bps. This news was so well received that investors and traders world wide responded with big trading days and early trading momentum leading into Thursday’s market open. The DOW, S&P 500 and Nasdaq all hit record highs. The Fed left market rates unchanged after their meeting making it five meetings in a row where that was the course of action.

Expectations that the Fed would cut rates by June rose 75% in futures markets which was up from 50% earlier this week. Chief Economist at KPMG Diane Swok shared that these actions leave the impression that the central bank “no longer believes that a recession is necessary to get inflation down. Powell even admitted that the recent spate of higher inflation data the past few months “hasn’t changed the overall story, which is that of inflation moving down gradually on a sometimes bumpy road toward 2%”.

The NAR Settlement

I’ve been asked by numerous clients on varying sides of the transaction what the NAR settlement means for brokers, commissions and sales prices. The short answer is, it effects absolutely nothing. In NYC our governing body is known as REBNY which was not impacted by the decision or settlement, so it is business as usual here.

The only material change that even the members of NAR will experience is that the buyer side commission will no longer be displayed on their MLS platform. How displaying an already negotiated buyer side compensation equates to price fixing and anti-trust violations is for another conversation but this ruling does not “change the way on how real estate will be sold” or “alter the future of real estate”. All of those statements are hyperbolic at best and completely dishonest at worst.

Market Performance

Here are how some other indexes and asset classes have performed as of this mornings opening bell.

NYC Market Update

Here is a view of new inventory that has come onto the NYC market over the past week as well as newly signed contracts in Manhattan. Big increase in signed contracts!

Mortgage Rate Update

Rates increased this week after several consecutive weeks of drops. As we enter the spring selling season, existing home inventory has increased slightly and new home construction is picking up. Pent-up demand continues to provide confidence to home builders and future sellers as there continues to be an overall supply shortage and the Fed signaling rate cuts this year.

News You Can Use

• Fed Officials Still See Three Interest-Rate Cuts This Year Wall Street Journal

• S&P 500 Closes at Historic Mark After Fed Meeting Bloomberg

• Sales of Previously Owned US Homes Surge to Highest in a Year Bloomberg

• Federal Reserve Holds Interest Rates Steady, Still Projects Cuts Ahead Axios

• US Homebuyer Sentiment Increases to an Eight-Month High Bloomberg

• Traders Embrace Fed’s ‘Goldilocks’ Outlook to Lift World Markets Bloomberg

• The US Economy is Nowhere Near a Recession CNN

• Short Sellers Up Their Wagers Against Commercial Real Estate Again Bloomberg

• Switzerland Surprises with Rate Cut, Moving Ahead of the ECB and Fed Bloomberg

• Reddit IPO pops 48% on the NYSE CNBC

• Musk Defends His Ketamine Use as Beneficial for Investors Reuters

The Deep Insight

Contact Me

Feel free to reach out to discuss more in-depth about your real estate goals, share your thoughts about my newsletter, or to share what you're experiencing in this market. Looking forward to hearing from you!