Where Do We Go From Here?
This week’s “pop” hit comes from the 1970 B-side of the hit album “25 or 6 to 4” from the group Chicago, “Where Do We Go from Here.” The song talks about how we need to come together and now. After the election, that cannot be truer. There are a lot of changes being discussed, from tariffs to tax cuts to mass deportations. All these topics are currently affecting rates as Wall Street continues to look at these changes as possibly inflationary. Their thought process is that tariffs will simply be passed on to the consumer. Tax cuts will place more money in consumers’ pockets, which will give them additional spending possibilities. Mass deportation could have an immediate impact on food prices as many believe that 50% of all farm workers are currently undocumented, and to replace them will cost even more money.
On the surface, all the above could be true. However, we have had tariffs before and currently have them in place today. Will additional tariffs raise prices? Possibly… but only until the free market opens other markets to produce these items or if the threat of tariffs to countries like China will bring their prices more in line. I am betting on this to be a scare tactic, but I do believe that the Trump administration will put them in place if needed. The tax cuts could stimulate the economy, which could very well increase spending, and thus, prices could rise. My biggest concern is the “mass deportation.” This could have an immediate effect on food prices. However, I must believe that the Trump administration has already thought this one out, and the first wave of deportations will start with individuals who probably need to be deported for reasons more than just being undocumented. My guess is that many of the farm workers will be given a “stay” of some sort to get them documented and thus have little to no effect on the prices at the grocery store.
The intent of these policies is to help what I would refer to as a struggling economy and I do believe the long-term effects will get us back on our feet. The current disconnect is that, in my opinion, Wall Street is pricing these changes as if they are happening today. Most of these changes will not truly have an effect for months and possibly several years. This, coupled with the Federal Reserve bringing their rates down over the next 12 months, should bring mortgage rates down as well… probably not to 5% anytime soon, but certainly should start us on the road to the low 6% range to possibly high 5% range.
We do need to come together as a Nation and get our economy back on its feet!
Remember… the BEST RATE… IS A LOCKED RATE… with a float down… ask me about our program that allows you to lock your rate and then float down if rates move lower.
Make sure you (or your buyer) get pre-approved before looking at homes so we can determine if you are looking in the correct price range and have you armed to submit an offer with a pre-approval letter!
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Blog post date: Thursday, November 14, 2024
