More of the Same...Only Better!

As was widely predicted, the Federal Reserve announced on July 31 that they were cutting the Federal Funds rates by ¼ of one percent. The move, which has been widely anticipated for weeks, was described by Fed Chairman Jerome Powell as “an insurance policy against potential speed bumps for the economy, including rising trade tensions and a slowdown in global growth.” 

While cutting the Federal Funds rate doesn’t have a direct relationship to home mortgage rates, the “trickle down” effect of lowering borrowing rates for banks eventually lowers their overall cost of doing business which then hits the streets where we live in the form of lower-priced mortgages, auto loans and other lines of credit. And who doesn’t like a lower mortgage or car payment? 

Filtering this news into our local real estate market data we can reach a couple of well founded conclusions. Once again in 2019, inventory has again not kept up with demand. Dane County listings for June 2019 were down nearly 5% from the year prior. When listings are down, sales will understandably suffer a bit, as there are fewer homes for buyers to buy. And one doesn’t need to be a senior economist to know what happens when a large group of buyers go after a limited supply of any commodity: Prices Increase. Nothing new here, but what lies ahead for real estate is truly exciting!