Housel points out how challenging it is to invest for the long term when the world regularly seems on the brink of collapse.
Everyone claims to be a "buy-and-hold" investor until markets faceplant. So stay the course despite the headlines.
The current global situation will inevitably create massive downstream effects on the economy and, eventually, the housing market.
In real estate, two numbers matter most: home prices and mortgage rates.
Fortunately for buyers, I don’t foresee any meaningful upward movement in prices - lumber tariffs might raise the cost of new construction and remodeling, but I don't see them changing the big picture much. In fact, economic uncertainty may result in a price dip - not so far, but to be seen.
What feels very possible is a lowering of mortgage rates.
Now, it's important to remember that mortgage rates aren't directly tied to the Federal Reserve rate that dominates headlines every few months. Instead, mortgage rates move with the 10-year Treasury note.
Here’s how it works: When the economy is in shambles, investors rush into safe government bonds. Because everyone wants them, the government doesn’t have to pay a high interest rate, and the rates go down.
And mortgage rates follow suit.
In theory, at least. But economics is called "the dismal science" for good reason. In economics, whenever the consensus is "Wouldn't it be great if...", whatever follows "if" generally doesn't materialize.
Still, rates might drop! And if they do, seize the opportunity to buy/refinance. When it's raining, grab a bucket.
But buyers, make sure you move quickly before prices escalate in response. We could see a repeat of the Covid-era market dynamics.
