When Will Rates Go Down? When Baylor Beats the Bobcats!

Mark’s Market Update – 9/7/2023

When are rates going to drop? Keep reading and watch the video…all will be revealed…

It’s been a summer. Interest rates are as high as the temperatures in Texas (I’ve said for years that Texas is God’s country – except during the summer when God shoves *all* of Texas into an oven to keep us from being cocky…)

My older kiddo is now playing golf at Texas State (and can you believe Texas State beat Baylor AT Baylor in Football? O…M…G….!) My younger kiddo is starting his freshman year at Lake Travis High School.

Dropping off a kid at college comes with some emotional baggage that I didn’t think about until the week leading up to Dorm Day. Did I teach him enough? Did I spend enough time with him? Did I not spend enough time with him? Was I too hard on him? Was I not hard enough on him? Is he ready for the world? Is the world ready for him? Will he miss us? Will we miss him?

Simply put…It’s “YES” to all of the questions. We did our best, and that best will have to be good enough.

We miss him. I had no idea how much he was my “straight guy” in the comedy duo team of “Mark and Connor”. He misses us as proven by the fact that he’s been back EVERY weekend since he left (apparently, he missed the amazing cooking of Tammy, the free laundry, and the nightly turn-down service that he got at Case De Forjador). ​

At this point, all we can say is that we raised him to be polite, and make good decisions (and if unsure – ask us). He’ll make mistakes. And he’ll make us proud…and sometimes those will happen at the same time.

So – Connor’s our college kid. Liam – you’re up now, and it’s time to spend the next four years prepping you for the same.

Rates are hovering slightly above 7% and that’s namely because of ongoing concern that the Fed isn’t quite done. Unfortunately, there’s been some conflicting data of late (we seem to keep having that) that’s keeping the Fed staring at the reports. NOTE: The things that I say are “good” aren’t actually “good” – they’re good in order to see the Fed stop pushing rates up and consider dropping them – but overall, not good.

Unemployment is up (good), while new jobs added is also up higher than expected (bad). Personal Consumption Expenditures (PCE) rose .2% in July – and a pretty low monthly reading…but not as low as people wanted. Credit Card delinquencies are up – which indicates that “on the edge” consumers have wiped out savings and are now charging on credit. This is also born out by the increase in home equity line applications.

So – I expect we’ll see interest rates remain high through the rest of the year and into the first quarter of next. If we continue to see CPI, PCE, and labor numbers leaning into “good” (recessionary/deflationary territory) – then we could start to see the Fed decrease rates.

For now – the strategy should be buy, buy, buy. The fall has always been more of a buyer’s market than other parts of the year, and more so as we get into the Holiday season (which is usually marked by the week of Halloween). If rates remain high, opportunity will exist… and remember, I can’t refinance a higher sales price. I can always refinance at a higher interest rate. When rates drop (and I expect that in March/April/May of next year), then home prices are going to go nuts.

If you can afford and can qualify to buy the home – buy the home. If you can’t, get to where you can. If your client can afford and qualify to buy the home – buy the home.