What’s Up with Real Estate?

National news and local views for the week ending Friday, December 15, 2023

Really important news this week! The Fed kept rates on hold, but more importantly, Fed members are now expecting rate cuts of between 0.5% and 1.0% next year. The markets were overjoyed, with 10-yr treasury yields moving below 4% and average 30-yr mortgage rates dropping to 6.6%. That’s down almost 1.5% in just two months!

National Real Estate News

Inflation ebbing

It doesn’t take an economist to see what’s going on: the rate of inflation peaked in mid-2022 and has declined steadily and significantly since then. November “headline” CPI (inflation for consumers) dropped to +3.1% year-over-year and November “headline” PPI (inflation for businesses) fell to just 0.9% year-over-year.

The Fed’s forecasts

The Federal Reserve kept short-term interest rates steady for the 3rd-straight meeting. That was no surprise. But what WAS a surprise was the Fed members’ forecasts for where they think the Federal Funds Rate will be by the end of 2024. 15 out of the 19 members expect rate cuts of between 50 and 100 basis points (that’s 0.5%-1.0%) over the course of next year. The median forecast was for 75 bps in cuts!

Party time

The Fed’s pivot from ‘maybe more hikes’ to ‘cuts next year’ had the markets in ecstasy. The Dow and S&P 500 hit all-time records. The yield on the 10-yr US treasury dropped below 4%. And average 30-year mortgage rates fell to 6.6%. That’s a decrease of nearly 150 bps (1.5%) in just two months. This will certainly boost demand…but will it help supply? That’s the big question.

Local Market Trends

As of Friday, December 15, 2023

Area	Median Price	Active Listings	New Listings – 5 days	Median Days on Market
Salt Lake City, UT	$572,450 0.1%	524 0.1%	20	63 0.1%
North Salt Lake, UT	$589,900 0%	31 -0.1%	–	55 0.3%
Bountiful, UT	$582,450 0%	72 -0.2%	5	65 0.1%
Farmington, UT	$657,732 0%	46 -0.2%	2	62 0.3%