Wow, I was very surprised at the survey results of the fed firing. 67% of respondents think that the firing of Cook at the fed is going to end up badly while 23% think that something very bad will happen from the firing. If survey respondents are correct, what does this mean for long term interest rates and real estate prices?
What were the results from the survey on Trump firing Federal Reserve Governor Cook
- Supreme Court halts firing and affirms fed independence 22%
- Supreme Court allows President to fire Cook as there is just cause 33%
- Lisa Cook resigns due to the political pressure 11%
- Supreme Court punts the case to the lower courts 11%
- ***Wildcard*** meaning something crazy happens 23%
If I add up the probabilities in red, there is a 67% chance that something bad happens with the federal reserve independence.
What happens to interest rates and prices?
If the survey respondents are correct, look for long term rates to stay the same (best case) or likely rise (most likely case) as the market gets spooked on long term inflation. Note, the federal reserve can do nothing to control longer term yields as they are set by the market based on the expectations for inflation, growth, etc… and reflected in the 10 year yield.
Regardless of rates, look for real estate to best case kick along through year end, but there is also a growing possibility of price pressures as rates remain high and consumer sentiment shifts.
Summary
Although I hope respondents to the survey are not correct, there is a high probability that that they could be. There is so much uncertainty now that nothing is off the table. Unfortunately real estate will face the brunt of the market with long term rates staying the same or rising and prices continuing to soften. We will all need to stay tuned for how this shakes out over the next 90 days.
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Glen Weinberg personally writes these weekly real estate blogs based on his real estate experience as a lender and property owner. I’m not an armchair reporter/writer. We are an actual private lender, lending our own money. We service our own loans and own commercial and residential real estate throughout the country.
My day job is and continues to be private real estate lending/ hard money lending which enables me to have a unique perspective on the market. I don’t accept any paid sponsorships or ads on my blog to ensure accurate information. I’ve been writing this for almost 20 years and have over 30k subscribers. Please like and share my blogs on linkedin, twitter, facebook, and other social media and forward to your friends . I would greatly appreciate it.
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Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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