Must See Charts
on Falling Interest Rates!
What have I learned in the past year that genuinely surprised me?
The Fed Funds futures market currently is pricing in a 73% chance of a Fed rate cut in July - and a 95.8% chance of two or more rate cuts in 2019. This was illustrated in the July Timing Letter.
Conventional wisdom is that Fed rate cuts are good for the stock market.
This unfortunately has not been the case with the last two Fed cutting cycles - as illustrated in the chart below from Crescat Capital LLC.
In other words, don't ask if an idea or theory makes sense. Ask if it works.
What About Falling Mortgage Rates?
[Taken from July 2019 Timing Letter]
Likewise, most real estate investors blindly assume that falling mortgage rates are always a positive for property values - but that too can be a mistake.
If you look at the housing market downturn in California from 1990 to 1996, you’ll see that mortgage rates fell from 10.5% to 7.5% during those six years.
During the CA housing downturn from 2006 to 2012, mortgage rates fell from 6.5% to 3.5%.
Where are housing prices going from here? Simply crunch the numbers, read the data, and do what it tells you to do.
That’s how you make better real estate decisions.
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