June 17, 2025 – Is This The One?

Economic Commentary

Today the Federal Reserve’s Open Market Committee is meeting.  They have not lowered rates since December of last year, a period of six months. Publicly they have taken a “wait and see” approach to any rate change in light of the fact that tariff policy has thrown the markets into a tizzy featuring increased volatility. Their argument is that higher prices caused by tariffs could reignite inflation, which is especially concerning if it occurs in an environment in which consumer demand is decreasing.

On the other hand, there are good arguments on the side of a rate decrease. For one, the recent data on inflation has been very tame. This is a trend which has continued for quite some time since inflation reached its peak over two years ago. In addition, we have seen a marked slowdown in consumer spending over the past few months, highlighted by a negative growth rate for the economy in the first quarter of this year. The purpose of lowering rates could be to stimulate an economy which is slowing significantly.

If tariffs truly reignite inflation at a time in which the economy is stagnating, we would be experiencing the dreaded phenomenon of “stagflation.” This is what the Fed is afraid of.  We do note that that the Fed has a history of waiting too long to address certain situations. For example, their reticence to raise rates from their historic recent lows during the pandemic most likely contributed to the sharp increase in inflation we experienced. Hopefully, the Fed does not wait too long during this cycle.

Weekly Interest Rate Overview

The Markets. Mortgage rates were stable in the past week, though they did start to ease towards the end of the week in reaction to the release of positive inflation data. According to the Freddie Mac weekly survey, 30-year fixed rates eased one tick to 6.84% from 6.85% the previous week. In addition, 15-year loans decreased slightly to 5.97%. A year ago, 30-year fixed rates averaged 6.95%, 0.11% higher than today. Attributed to Freddie Mac: “Mortgage rates have moved within a narrow range for the past few months, and this week is no different. Rate stability, improving inventory and slower house price growth are an encouraging combination this National Homeownership Month.” Note: Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Real Estate News

In 2005, the median U.S. homeowner lived in and owned their primary home for 6.5 years. In 2024, the median U.S. homeowner lived in and owned their primary home for 11.8 years. That’s according to Redfin’s latest analysis. That means the typical U.S. home today has been owned by the same person for nearly twice as long as in 2005—resulting in less turnover in the housing market. That affects the entire ecosystem. For some millennials and Gen Xers, it could mean staying longer in their starter homes as they struggle to find a move-up property in their desired location. And for first-time buyers, especially Gen Z, the lack of turnover means fewer entry-level homes coming up for sale.  After climbing every year between 2005 and 2020, U.S. homeowner tenure has come down a bit due to the increase in home sales during the pandemic housing boom. However, given spiked mortgage rates and low existing home sales, tenure rates could start going higher again.  “Moving forward, we expect homeowner tenure to stay flat or increase slightly for the foreseeable future,” wrote Redfin researchers. “Existing-home sales hit a 15-year low last year, with many homeowners locked in by low mortgage rates, and while sales should pick up a bit this year, it’ll be more of a trickle than a flood.”   Why did U.S. homeowner tenure increase so much between 2005 and 2020? Redfin says, in part, it’s because so many baby boomers choose to age in place. Most (54%) baby boomers who own homes own them free and clear, with no outstanding mortgage. In addition to aging in place, the Redfin report also cites state-level tax policies that encourage homeowners not to move as part of the reason for increased homeowner tenures. There’s also the fact that older Americans have higher homeownership rates, and over the past few decades, the composition of the U.S. population has shifted older as the giant baby boomer generation has aged and birth rates have declined. That has put upward pressure on homeowner tenure. The increase in average homeowner tenure over the past two decades has subdued turnover, limiting the purchasing opportunities for certain properties and holding back existing home sales.  Source: Fast Company

In March 2024, the National Association of Realtors (NAR) agreed to a $418 million settlement to resolve multiple suits with sellers who claimed NAR was driving up the price of commissions.  NAR’s settlement accomplished two goals: it released most NAR members and many industry stakeholders from liability in these instances, and it ensured that cooperative compensation remains an option for customers when purchasing or selling a house.  In the settlement, NAR also obtained a mechanism enabling practically all brokerage organizations with a residential transaction volume of more than $2 billion in 2022, as well as MLSs that are not completely controlled by Realtor’s associations, to acquire releases efficiently if they so desire.  A new report from Redfin finds that the average buyer’s agent commission was 2.4% for homes sold in Q1 of 2025, up slightly from 2.37% reported in Q4 of 2024, and 2.36% in Q3 of 2024—when the new NAR commissions rules went into effect—but down slightly from 2.43% in Q1 of 2024, when the new rules were announced.  Bottom line … buyer’s agent commissions haven’t changed much since new real estate commission rules went into effect in the U.S. on August 1. Redfin analyzed data on buyer’s agent commissions for closed home sales. The analysis uses national, aggregated sales data from Redfin agents’ listings, deals referred by Redfin.com to partner agents and deals where buyers used Redfin-owned Bay Equity Home Loans. When the commissions data are broken down by price tier, a different trend emerges. Buyer’s agents were reportedly earning a slightly smaller commission percentage for luxury homes than before the NAR settlement, and a slightly bigger percentage for more affordable homes.  Source; MortgagePoint

Nearly three-quarters (74%) of Americans worry about property taxes, yet few appeal those taxes, according to a recent survey by Ownwell. Many homeowners are skeptical of their home’s appraised value, and others don’t even know they can appeal their property’s appraised value. This costs homeowners potentially thousands of dollars in tax bills—even though those homeowners would go out of their way to save $5 at the store.  Property tax bills are an ever-growing concern for homeowners across the country. Nearly three in four (74%) worry about significant increases to their annual property tax bills. Even homeowners who set aside money to pay their tax bills find themselves underprepared. 82% of respondents said they budgeted for property taxes, but 59% were shocked by their last property tax bill, and 66% paid more than anticipated.  Yet most do not do the one thing that could save them money: challenge their property tax assessments, even though almost half (48%) of respondents believe their home’s assessed value is inaccurate, and 29% suspect their home is overvalued, which leads to them overpaying on property taxes.  Source: MP Daily