Housing Struggles and Interest Rate Changes on the Horizon | Real Estate Market Update w/ Martin Perdomo

Discover why Los Angeles might just be the toughest housing market in America right now. With wildfires wreaking havoc on over 6,350 properties, the city is caught in a frenzy of skyrocketing rents and fierce competition for homes. We'll unpack the challenges homebuyers and investors face and explore how these disasters are reshaping the market dynamics in LA. If you're navigating this volatile terrain, you'll want to understand the ripple effects that are making LA the least affordable place to own or rent a home in the United States.

Meanwhile, tune in as we dissect the Federal Reserve's latest hints at potential interest rate cuts, fueled by a cooling inflation trend. Governor Christopher Waller's comments set the stage for a possible shift in monetary policy, which could have a profound impact on your investment strategy. We delve into the implications of a possibly dovish Fed approach, just as a familiar face, President Trump, steps back into the political arena. Whether you're a seasoned investor or just starting your financial journey, these insights could be pivotal in planning your next move towards financial independence.

Transcript

Speaker 1: 0:00

Welcome back to another episode of Wealthy AF, where we give you the latest episodes and insights on personal finance, investing and real estate. In today's episode, we have two major stories that could directly affect your wallet. First, we'll discuss the impact of the ongoing Los Angeles wildfires on the local housing market and rental data, and what homebuyers and investors need to be aware of. Then we'll shift our focus to the Federal Reserve, where recent comments suggest we might see rate cuts sooner than expected if inflation continues to cool down. Let's dive right into the details. The LA housing market is facing a wildfire-fueled crisis. Here's what you need to know and how it could impact your next move.

Speaker 1: 0:49

Wildfires have destroyed or damaged 14% of homes in key fire zones, affecting over 6,350 properties and causing rental wars like never before. Can you imagine? Rents were already high in LA and now you add to this imagine this a $16,000 a month rental skyrocketing to $30,000 in a bidding war for a two year lease year lease my goodness, this is nuts. That's the kind of frenzy LA is seeing as people scramble for housing. Single family homes are being snapped up faster than ever as the fires create a ripple effect in an already tight market. Numbers that hit hard. The median home price is 905 250, a 6.5 percent year-over-year increase in la median mortgage nearly six thousand dollars a month, guys. That doesn't include taxes and insurance. All right, 78 of median income is now needed just to cover housing costs, making LA the least affordable housing market in the US.

Speaker 1: 2:18

Rentals are a battleground. Online rental listings views spiked by 93% in just three days as people searched for homes and Los Angeles homes for rent. Google searches jumped 186% Airbnb homes. Short-term rentals are converting to long-term rentals, while insurance companies are pulling out, making it even harder to secure a home. And here's the bigger picture. La housing crisis could push more people out of high-risk areas and a trend that's been growing. But the wildfires they're the tipping point. Whether you're an investor or a homeowner, knowing how to navigate these volatile times could be a game changer.

Speaker 1: 3:17

But before we dive into more real estate news data, thank you to everyone who attended another successful Wealthy AF investor event in Allentown. Your passion for real estate growth and financial freedom made this event truly unforgettable. We couldn't have asked for a better group of investors, professional and future moguls. Your participation, energy and insights are exactly what makes these events such a success. We're excited to continue empowering you in your journey towards financial independence. Stay tuned for our upcoming events, as we're just getting started. If you're ready to take the next step, don't forget to check out our coaching programs and resources. Just keep building wealth and let's just keep building wealth together. Thank you again and we'll see you at the next Wealthy AF event.

Speaker 1: 4:13

In other financial news, federal Reserve Governor Christopher Waller hinted that rate cuts could come sooner and faster than expected if inflation continues to ease. During a CNBC interview, waller noted that inflation is approaching the Fed's 2% target, citing the personal consumption expenditures price index as a key indicator. He emphasized that if the current trends hold, we could see as many S3 or 4-way cuts this year, with the possibility of a cut as early as the Fed's March meeting. That's exciting. If that happens, this perspective has shifted market expectations, with investors now anticipating two rate cuts in 2025 instead of just one. Bond yields have already fallen in response to Waller's remark, signaling the possibility of a more dovish Fed stance moving forward. While the Fed is expected to keep rates steady at his upcoming meeting, waller's comments introduced the potential for an earlier policy shift.

Speaker 1: 5:25

What's interesting here is, guys, that we have a new president. Obviously, president trump is. Uh was a real estate guy, I think, once a real estate guy, always a real estate guy, and as much as these these guys are saying they don't take orders from the president, but all of a sudden, the president comes into office and they're taking a new president comes into office, president Trump comes back into office and now they're taking a dovish approach. I think we're going to see rates fall drastically in 2025. This is my prediction. We're already seeing the 10-year treasury drop dramatically. I'm working on some DSCR loans right now for some investments that we have and we're seeing rates a big difference in rates from just a week ago before President, when President Trump was just President-elect, to now when President Trump is actually President Trump, and I think just his presence and what he stands for has caused interest rates to come down. I know there's more to this, but the whole markets the treasury and the markets are very emotionally driven and they always have been.

Speaker 1: 6:41

Look this Fed Chair Waller comes out and makes a statement and rates come down. Why did he say this statement, right? Is it because we have a new president and President Trump's back in office? I don't know, but I have a funny suspicion that I think that's what's going on here. If inflation continues continues its downward trajectory and the labor market remains solid, these rate cuts could act as a stimulus, supporting both consumer spending and investments Absolutely. However, waller also acknowledged that strong economic data, including retail sales and low unemployment, still paint a picture of a restrictive policy environment. The Fed's actions in the coming months will likely hinge on balancing these two factors. If you're ready to turn your goals into gold, you're in the right place, because being broke was never the plan. Let's be wealthy and faithful, which is what Wealthy AF truly stands for. I'll see you guys. Peace out.