THIS WEEKS HEADLINES + PLUS SOME RICH TEA

This week was intense. But most of the headlines turned out to be all bark, no basis points. That’s an interest rate joke. I’m going to catch you up on the GDP news, Fed announcement, inflation readings aaaand this morning’s BIGGEST NEWS - the jobs report. Stay with me so you’ll know exactly what all of this means for your real estate strategy. I also have a little tea for you on what’s happening to the rich right now. 

Let’s start with GDP.  

The US rebounded in a major way in Q2 2025. Gross Domestic Product was up 3% annualized from a -.5 percent reading in Q1. Problem is the bounce was due to a jump in imports. You know why that happened – we were trying to get ahead of those tariffs. We actually knew this was coming. Sales to domestic buyers were actually the weakest they’ve been in 3 years. This GDP looked good on the surface but was definitely not indicative of stellar spending or investment. 

Why this matters for real estate… 

Consumer spending is weakening across the entire economy mirrors what we are seeing in the real estate market. This is important for both sellers and buyers to understand because so much of finance is behavioral rather than mathematical or even logical. 

America may or may not be on a path to greatness, but the consumer is not feeling great. 

Fed Watch: No Cut, No Kidding. 

We knew we weren’t getting a cut right now. Many were watching to see if there would be any dissenters to that decision though. Low and behold, two Trump appointed chairs – made the first double dissent since 1993. They felt a 25-basis point cut was appropriate at this juncture. Powell stood his ground that the trade war is fueling price gains and it’s enough to justify a continued pause. 

Why this matters for real estate… 

Interest rates obvi! They remain steady in the mid-6’s and will likely stay there or bounce up and down towards 7% until inflation cools. Many are advocating for lower borrowing costs to get Americans buying and selling real estate. Of course real estate purchases drive sales in many other sectors of the economy as well – think household furniture and goods. But if I understand economics, increased spending across the board would put us in the same inflationary environment that got us into this mess… 

July Jobs Report 

Well, well, well what have we here. While the markets expected 110,000 jobs to be added in July, only 73k showed up. The unemployment rate edged up to 4.2%. But the real news here is that while May originally reported 144,000 jobs (and the market reacted to that news of a strong booming labor market), that number is now being revised down to just 19,000. For June, we were told 147,000 jobs were added and again the market reacted, and interest rates remained elevated as a result. That number is being revised to 14,000. That is a total of 258,000 jobs we thought existed, leading everyone to believe the job market was strong despite feeling like it really wasn’t. That’s 258,000 jobs that never existed. 

We’ve talked at length about the Jobs Report and its impact on Fed Policy here. When the labor market remains strong, it gives the Fed room to continue to attack inflation by keeping borrowing costs high. Meaning, until people can’t find jobs – the Fed can keep interest rates high. When the data they are basing these decisions on is this unreliable, it creates a bit of a mess. 

That’s what we have right now. A mess. 

Why this matters for real estate… 

Bond traders are having a party this morning which has caused mortgage bonds to improve by 35 basis points so far. Markets are now putting a 75-80% probability on a Fed Rate cut in September. Earlier this week that probability was only 38% so that tells you what an impact this report is having. 

You should also quickly reference last week’s blog so you’ll know exactly what happens to the real estate market as interest rates come down. Hint: This buyers’ market window closes up as quickly as it opened. 

Something I’m personally watching? 

Rising Delinquencies among High Earners 

That’s weird…. delinquency rates for households earning more than $150k have more than doubled since 2023. This could be because white collar job prospects are their worst since before Covid. But personally I think it’s because my generation is obsessed with status and has the worst case of Keeping up with the Joneses in American history. 

Now these are not mortgage delinquencies. We’re talking about auto loans and credit cards. Credit cards are baaaad even in some of the highest income zip codes. In those fancy hoods, credit card delinquencies have almost doubled over the past 3 years. 

Why this matters for real estate… 

High earners drive consumer spending; they’re the engine on this bus accounting for about half of all discretionary spending in our country. I wonder if these folks trashing their credit by missing minimum payments has anything to do with the number of active listings in Arrowcreek right now? 

Property Pursuits is next week and I’m looking for a guest to debate on whether this economy is booming or busting. Let me know if you’re interested!