Did the US Federal Reserve just kill the Housing Market?

For those of you waiting, this newsletter was supposed to get uploaded on the 23.09.22 so please forgive its late arrival! Don't worry there will be another newsletter at midday today!

I know some of you, in fact many of you reading the headline above now are not based in the United States and so may be thinking the above headline won’t apply to you – BUT THAT COULD BE A BIG MISTAKE!!

I don’t want to come across as alarmist here, but we must recognise that we live in a global economy and a change in economic policy on the other side of the world can have serious repercussions in your own backyard.

I have been warning about inflation ever since Episode 61 of the podcast back in June 2021 – once it gets embedded in an economy it can quickly spiral out of control and destroy both the currency and the wider economy.

This week Jerome Powell, the Chairman of the US Federal Reserve came out and said exactly that – he explained that Fed’s Number One Priority is now to bring price stability back to the economy.

To get US inflation from 8% back down to 2% is going to require considerable economic pain – typically achieved by raising short term interest rates, which it did this week again by 0.75% the third such hike in 2022.

These rate hikes have already dramatically altered the prospects of the US housing market with the existing home sales falling again in August, for the seventh consecutive month.

So why does this matter to you??

Simply because inflation is also proving to be a persistent problem throughout the larger economies of Europe and in the UK where it recently hit 9.9% - its highest rate in over 40-years!

The unpleasant medicine (rate hikes) that the US Fed has started prescribing back home is increasingly likely to start being prescribed by both the Bank of England and the European Central Bank.

Its bad enough trying to pay exorbitant energy bills, but when mortgages start to rise (and they will) it is going to make affordability a central issue for the housing market.

This week’s links (below) have been selected to provide you with some tips, tools and strategies that I believe may help you traverse an uncertain market in the months ahead.

Podcast – Refurbish and renovate at scale – talking with Brian Grimes, CFP?

This week I am speaking with Brian Grimes, a successful real estate developer based in the Bronx in New York City but originally from Philadelphia where he started his real estate business.?Brian shares the strategies that have allowed him to grow his portfolio to over 300 units and opened up how he was planning to navigate the rising interest rates.?This is a very valuable episode, take a listen!

If you would like to watch the video of my discussion with Brian Grimes the entire podcast is available on the Behind The Facade YouTube channel: https://youtu.be/04LbjKnMLm0

Blog – 5 Ways your brain is playing tricks on you

As I always say, your mindset is the key to your success, not just in real estate, but in all things. ?Take a look at 5 ways your brain could be sending you down the wrong path… and then learn how to course correct!

“For such a complex organ, the brain can be incredibly stupid at times. OK, it may do some pretty remarkable things (like making sure you’re breathing without having to think about it), but it can also play tricks on you.”        

Video - Why do Real Estate & Property Investors FAIL?

In this video I introduce what I have termed the 4E's - these are four things that if ignored can cause long term if not permanent damage to your investment portfolio. ?It does not matter whether you are just starting out or a hugely experienced billionaire, these things will catch you and I could cite multiple examples of very experienced investors who got caught by these. ?Watch it now!

In Closing...

An uncertain housing market like this can seem like a good time to walk away and hide, to bury your head in the sand - BUT THAT TOO COULD BE A BIG MISTAKE!!

You see during an uncertain market; huge opportunities can present themselves but attract little or no attention from investors.?The fearful mindset Warren Buffer talks about is everywhere.

That is when he is at his greediest!

But being in a position to take advantage of such opportunities requires preparation, a change in how things are done and most of all a change in your mindset and your network.

If you are interested to learn more about how you can prepare for such opportunities, consider joining my Elite Property Accelerator – the latest intake has just opened.

Until next week!

?Gavin J Gallagher

PS don't forget to check test yourself with my Property Investor Readiness Test and get your personalised scorecard with results and suggestions...