4171 viewsBy Serjik "Serj" Markarian, Licensed Real Estate Salesperson
The Fed announced this afternoon that it’s holding interest rates steady between 5.25 and 5.5 percent. This marks the second consecutive meeting where rates have remained unchanged, keeping the central bank's benchmark lending rate at its highest level in 22 years. They did, however, hint at the potential for future rate hikes should it be necessary to combat persistent inflation.
In a post-meeting statement, the Fed noted that “economic activity expanded at a strong pace in the third quarter”—a recent development that has left some economists perplexed. Despite a series of rate hikes over the past 18 months, the US economy has not fallen into a recession but, instead, has expanded at a strong 4.9 percent annualized rate in Q3, driven by strong consumer spending.
A question stemming from all of this and brought to light in a New York Times article last week is: “How much weight should be given to economists forecasts?”
Economists spent 2021 expecting inflation to prove “transitory”, they spent much of 2022 underestimating its staying power, and they spent early 2023 predicting that the Federal Reserve’s rate increases, meant to cure the inflation, would plunge the economy into a recession. None of those forecasts have panned out.
In a CNBC article, it suggests that recent inaccurate economic forecasts have actually been a long-standing trend. Torsten Slok, an Apollo Global Management Asset Manager said, “The forecasts have been embarrassingly wrong, in the entire forecasting community. We are still trying to figure out how this new economy works.”
This uncertainty among economists tends to find its way to the real estate market, causing potential buyers to reluctantly to move forward with their purchases and sellers questioning the actual value of their homes. This can have a negative effect on one’s decision-making process, and underscores why we shouldn’t be fully reliant upon economic forecasts.
As Barbara Corcoran cautioned earlier this summer, buyer demand will increase as soon as interest rates drop, putting prospective buyers at risk of dealing with significantly higher home prices. Another reason one shouldn’t base their decision on what they’re reading at face value.
Yes, economic shifts impact the NYC real estate market, but it’s important to consider the big picture and evaluate all factors and not solely base your decision on economic forecasts. Understanding the dynamic of the NYC real estate market, which is unlike any other US residential market, is key to making an informed decision.
I'm always available to provide guidance and valuable insights for anyone seeking to buy or invest, and I’m also happy to assist anyone looking to list and successfully sell their home with exceptional marketing, pricing strategies, and essential improvements.
