McKae Properties Real Estate Market Commentary

Looking back in past messages you will find a comment I made on the course of long rates, 10-year plus US Treasury Bond Rates.  In particular the 10-year bond is the bond that makes all mortgages for single family homes.  The yield curve will correct as the FED lowers interest rates on all bonds from 1-year US Treasuries back to the 30-day Treasuries.  The FED rates will come down and therefore so will the yields.  The change will be the long term rates of US TReasury Bonds will go up! Here is the present outlook.  The outlook is based upon the Swap Market that is used to trade one set of short term bonds for another set.  A bit like rolling maturities.  All the Swaps do is indicate the market forecast of FED action in where rates will be after the next FED meeting. Date of FED Mtg.          Rate Forecast.           % Certainty December 18, 2024......4.42%........................86% January 19, 2025.........4.20%........................89.8% March 19, 2025............3.956%............

If one can get their faces off the Election and look at how interest rates will affect Real Estate, there maybe a chance Buyers can manage their decision to buy a home or invest in real estate. The frustrating event of a rate cut of 50 basis points, or one half of one percent has created, most buyers and investors with, a HUH?  Moment.  The mortgage rates dropped to 6.09% on the day of the interest rate cut by the FED.  On the investor side, interest rates for commercial properties dropped, but the down payments remained at 35%.  No big benefit there.  The Yield Curve corrected further with the 2-year Treasury Bonds dropping below the 10-Year Treasury Bonds.  A major improvement with the first time in years that the interest rate market was not forecasting a recession.  That is really good news! What happened after that was something I expected, the most market commentaries did not.  The Ten Year US Treasury Bond yield increased!.  This is normal for a growing economy, in our case a Go