I wanna talk to you about interest rates today, what that means for you as a homeowner and a home buyer. Right now, interest rates are obviously moving a lot right now. They are starting to go up a bit. They really have to start going up because there’s really nowhere else for them to go other than going negative and I don’t think this country can stomach that right now. There are places in the world that are negative interest rates and that means you put your money in the bank and you pay the bank for them to hold your money.
So a very interesting concept, but that is not us right now so we’re not gonna worry about that. Interest rates going up means that the cost of money is more. The markets don’t like this as much. That’s why the markets have been going a little bit crazy right now. It does mean the dollar’s strengthening. So the dollar was going up a lot of times, that means that gold and silver are going down, so housing prices are going up this is going to combat that because now the housing prices are going to start going down a little bit because of that also. Gold and silver are going down, housing is going down, the stock market’s going down when the interest rates go up. Bonds, when you have the bond market, that means the existing bond market, when the rates go up, that means that you’re going to get hurt because new bonds that are being issued are getting a better rate. So people are going to go buy new bonds instead of on the market with your bonds. Your bond is not going to be worth as much, so people aren’t going to pay as much to get a lower rate.
As a Home Seller
So again, as a home seller, it’s a little bit frustrating because you have the market slowing a little bit. We know we’re seeing it right now all across the country. I’ve seen an article after article after article, if you watch, if you read Zero Hedge, it’s an amazing website and they have a ton, a plethora of amazing articles and they are constantly talking right now about the plumbing sales prices of homes and just as absorption rate, new home starts, all these different articles about what’s going on in the housing market. So it was very, very interesting, the time we’re entering, we’ve seen it now just locally in Metro Detroit. The market updates, we’ve done the last month or two for all the five major counties, the first time in about two years, we’ve seen the numbers started to plateau or dip a little bit. We have not seen that in two years. So that’s what that means for you as a home seller. It means that there are possible headwinds right now and there’s possible that there are more headwinds coming.
As a Home Buyer
So as a buyer, it means that housing is going to go down it, but your cost of money is going to be a little bit more expensive. In the grand scheme of things, it’s not raising five points, it’s raising 0.5 or 0.25. So it’s gonna be a little bit every month and obviously over the course of time that’s a bit. But remember in 30 years, with inflation and us printing money, that money, you might have to pay a house worth $200,000 for $400,000 over the course of 30 years. But money’s going to be way cheaper in the future so that fixed rate is going to save you because in the future if we print our money like crazy, that money is still going to be cheaper than it is right now.
Remember, the money you own right now is more expensive. It’s worth more than money in the future. So in wrapping up this, interest rate hike is needed overall as the economy grows and we continue to move along, but it is going to hurt something. Because like I said, it’s hurting, suppressing gold prices. Bonds are getting hit and home prices are starting to come down a little bit. So, homeowners, it’s hurting them a little bit. Home buyers, though it is helping you because now you’re starting to win some home battles that you weren’t able to before. The cost of money is going up a little bit. But again, it’s not. We’re not raising five points here, remember that. So we’re talking, you know, a few dollars a month. When you do the math overall, you’re starting to see the ability to purchase homes, especially for many of you first time home buyers. You’re seeing the ability to purchase some homes now that you were fighting with 10 other people before.
It’s a Global Economy
So this is a very interesting time right now in the markets in the United States. And remember our economies are linked globally now. Every market is trading exactly the same. Every market trades like this. So China, Russia, Japan, Brazil, Europe, everything, they’re all their markets look like this. It used to be they’d come in different ways and over the last 20 years they’ve all synced up, we’re a global economy now. Now they’re all trading the same direction and going the same direction. So a lot of interesting things going on right now. I wanted to make this quick video like I said because is our Macro Q and A, some big stuff going on and it really is an unbelievable time to be alive. Just in general. Remember if you’re alive right now, if you’re seeing this video, you hit the Jackpot. You literally hit the Jackpot. You hit the lottery. Just the chances, the odds of being alive right now are next to nothing. So remember that there was a lot of crazy things happening right now, but these are very minor things. Interest rates, great. At the end of everything and in the grand scheme of life, the interest rate is a very small thing in life. There are a lot bigger things going on, but this is our Macro Q and A so that’s why we’re talking about interest rates.
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