Market Insights from Mortgage Advisor James Adair

Thanks to our friend James for writing this guest post!

The BIG STORY that everyone will be interested in is around the collapse and government takeover of Silicon Valley Bank + Signature Bank.  Does this impact real estate?  I think the answer will be YES it will impact our real estate market, and here is how I see it playing out.  Let’s rewind to March of 2022- exactly one year ago.  The Fed began to raise their interest rate to try and get in front of some surprise inflation data that surfaced a few months prior.  The inflation story became the dominant narrative in the world of high finance at this time, replacing the previous COVID narrative. The severity of the growth in inflation caused other rates, like mortgage rates to spike quickly, and stay elevated peaking around mid-October of 2022.  The Fed has been raising rates more steeply and for a longer duration than any previous time, and last week we finally saw an “unintended consequence” of the Fed strategy with the SVB bank collapse.  The entire financial sector has been WAITING for the Fed to "pivot" away from their current policy of intense interest rate raising, and this SVB episode just might be the moment where the Fed MUST change their strategy.  We've already seen the expectation of a March 23 Fed rate increase drop from .5, to .25.... and over the weekend the Goldman Sachs analysts posted that they are now expecting a complete Fed PAUSE - so NO rate increases.  

The collapse of these banks is highly DEFLATIONARY.  The reduction of inflation, combined with what is HIGHLY likely to be a US recession later this year may cause rates to drop, and drop fast.

If you got a mortgage in 2022, and would like to be prepared to take advantage of what is to come this year, I have created a service for Living Room Realty Clients:

Get in touch with James:
James Adair
Mortgage Advisor
NMLS# 272766
(503) 957-8315
james.adair@neohomeloans.com