Fed About to RAISE Rates, Not Cut Them

0:00This episode is brought to you by Indeed. Stop waiting around for the perfect candidate. Instead, use Indeed Sponsored Jobs to find the right people with the right skills, fast. It's a simple way to make sure your listing is the first candidate to see. According to Indeed Data, Sponsored Jobs have four times more applicants than non-sponsored jobs. So go build your dream team today, with Indeed. Get a $75 Sponsored Job Credit at Indeed.com slash podcast, Terms and Conditions Applying. We folks, I don't think the market is ready for it, but we need to start having an honest conversation about the fact that the next Fed rate move is up, not down. Yes, I said it after the blistering PPI reading this morning, which doesn't currently count the energy increase. It is time to seriously think about raising interest rates, not lowering them. I know this is probably really negative news for the mortgage industry, but we've got to have this conversation, because I don't think enough people are.

1:02Matt, the mortgage guy, what's going on? Yeah, I mean, it's interesting to watch, because for all intents and purposes, everybody's just counting on the fact that Fed's not going to do anything, and this meeting, there's a one in a bazillion chance. As we're talking Jerome Powell saying, we're keeping our Fed funds rate the same April meeting, I think it's like, you'd have to bet $100 to win for that they're going to do a rate cut. But not enough people are talking about the fact that when PPI is double, what it's expected or more, like 0.3 was on month, yeah, 0.7, there's a real chance that if, you know, this inflation boogey monster scares enough people enough that they go, well, we've probably got to hike it up 25 basis points. Yeah, the Fed is in a really tough spot. I'm going to be really looking at their dot plot when that's released in about an hour because, again, if the Fed is honest, I think you're going to see these four things, and

2:05I'm calling my shot on four things, one, they're going to talk about less rate cuts than the previous dot plot. Previously, they were talking one to two, they're going to be talking about zero to one. And some of them, I think one or two people are going to be brave enough to say rate tend to go up. Number two, they have to say that unemployment is going to go higher, right? They were stuck at four, four or four or five over the next 18 months at Haskell higher. Growth has to go lower after that horrible Q4 reading at 0.7, moot missing expectations. Now you add war, now you add, you know, demand destruction. And then, oh, by the way, you've got inflation, which is just simply ripping even before the energy is rolled in next month. Yeah, do stagflation, just, just, just like screaming stagflation. So this is, this is the bogeyman that they were hoping isn't coming and it seems to be here. Yeah, you know what, Mike? I had this picture in my head this morning, and it's funny because we've had discussions

3:07every single Wednesday and, you know, you're watching the real estate market, you know, you've talked to industry folks like myself who are in, you know, mortgage real estate title. And I feel like I had taken my final step out of quicksand, right? After 23, 24 and 25 were just slow going transaction wise and, you know, we were at a place where it's like the sun is shining, fire sentiment is back, you know, we've got some affordability back. It's not perfect conditions, but man, it just, it feels good. To me, some of these latest numbers, some of this latest news and the buyer sentiment that I feel, I feel it in my conversations is like, I just stepped back into six inches of, of quicksand, you know, in the housing market, which, you know, it doesn't feel good or doesn't. I don't like to say it, but it's the truth. No, I think, I think that's exactly right. I mean, I came into the year in January saying we're going to be up eight to 11% on transactions.

4:12I just don't think that's true anymore. I think, I think you're absolutely right. This, this war, and again, we could always hope it's over tomorrow, right? If this is over tomorrow, we probably can save the spring selling season, but it certainly doesn't feel like it's going to be over tomorrow. And, you know, if this goes on two or three more weeks, you can write off the spring selling season. It will be over. And yeah, I think, I think your analogy is right. I think there was a lot of people kind of feeling good in the real estate industry, like, okay, trends. It's, it's, it's coming back. We have positive momentum for the first time. But now it's just not there. And dude, I don't have any, I don't have very much good news. If the Fed has to raise rates and we take mortgages back to seven, well, well, the good news, the other side of the coin is always investors will win. Well, it's great news for investors, which, you know, to me is, like, not everybody can have it good, right, buyers, sellers, investors.

5:14First time on buyers, like, you can't please everybody in a market where people are uncertain, sucks for sellers. You know, is great for investors, is great for people out there getting good deals. So yeah, to be interesting to see how this plays out, I was running some numbers. I think I did in, I'll end Q one, doing about 40% of my 2025 volume. Nice. So, you know, Q one's not even a big quarter, you know, it's probably on pace to increase business from 25 to 26 by 70, 80%, maybe even 100%, depending on now Q two and Q three went, you know, that could slow down. But the thing that I can remind myself is as an investor myself, coming out of this 1031 exchange, I'll get some good deals, all the one rental time community that, you know, seem to be talking more and more to and go and deeper. I love it. Keep, keep going to MTMG.com,

6:18keep booking calls, keep connecting with me and the team. I love it. One rental time, folks across the country, which reminds me, we'll do an April live stream inside of school and we'll do some live pricing in there. But those are the people that are going to benefit from, you know, a little bit prolonged winter, higher for longer, higher for longer, buyer's market. Again, I feel really bad. And on the other hand, not bad at all. I feel really bad because it's horrible to be a seller today. It's horrible to be a first time home buyer. But like you said, the investors out there, the grinders, we're going to find plenty of motivated sellers, right? You've got sellers who tried to sell last year and couldn't, they relisted this year or not selling. They're going to start, they're going to start taking stupid prices. And I don't know if you heard this, but even Nick Gurley, I think that's how you say it, Gurley, from Reventure Consulting, the ultimate, the original crash bro, he bought a home,

7:20just bought a property, 100K off 2021 sales price, move in ready. The market is crashing in certain areas. Mega deals, if you know where to look and how to negotiate, I could not agree with his last line more. And if Nick, Nick Gurley from Reventure Consulting is saying mega deals, if you know where to look and how to negotiate, if that doesn't scream, do the work, write offers, learn great deals, I don't know what else does. If a crash bro is buying, that tells you something. This is an invitation to Nick Gurley, we got a great school community, enjoying for 20 bucks a month. One reds a lot of times school, come on down Nick, it sounds like you finally made the turn, you finally seen what it's like to be a savvy investor and do the work. So yeah, I saw that and the best part is, you know, we've talked about it and investors know this, smart investors do, you know, buying real estate and getting rich with real estate is a long-term play. So I'm,

8:22I think I'm going to do the math mic because I'm a math nerd. I'm going to show why, you know, Nick and his infinite wisdom thinks that he hit a home run by paying $100,000 less than he did in 21, buying in 21 would have been better at the higher price. I think so. I mean, if you do the math because of interest rates, yeah, and then you consider five years of more rent payments and not mortgage paydown, I would love for someone to do the math. And again, he bought in Atlanta, Georgia, I found out. So again, if we take the median home price for Atlanta and then run the numbers, I, you know, I had somebody do a quick math on it, it looks like he's paying about $60,000 bucks more in interest over the life of the loan, even though we got $100,000. Yeah, at least, yeah, at least. So yeah, that'll be interesting, but that's that, that's a, a funny little caveat. Was he a mortgage broker back in the day in Texas? I thought I heard and then he, he was a processor. I think Travis from real estate mindset was a mortgage broker. I think Nick

9:25early was a processor, but I'm not, I'm not sure. I don't track those guys all that well. But let's, you know, it's Fed day and we got dot plots and we got Jerome Powell. I, I really think Jerome Powell's got to talk about stagflation. I think he's got to talk about raising interest rates, and I don't think the market's ready, right? That I don't think the 10 year note is ready for the Fed to be a hawk and talk about raising rates. It's, it's going to be interesting today. The wild part too is like after that huge PPI read rates are only like 15 or 16 basis points worse on the day. You know, let's wait until after the Fed. That's the thing too is it's going to be very interesting. I had, I had all but written off these next couple Fed meetings as an interesting and, you know, what, what can we really learn or what are we going to hear that's going to be surprising now all of a sudden, you know, I'm also looking at that dot plot and we interested to hear what, you know, he says in the press conference at 2 30 Eastern. So when we hop

10:27off here, I'll hop on there and we'll see because it should have had more of an effect that huge PPI miss on the 10 year and on mortgage bonds, which it didn't and maybe, you know, they were just waiting for this afternoon and more data from from the Fed and their top plots going to be interesting. Also, I can only imagine the questions. Again, I remember Jerome Powell joking nine months ago, I don't see the stag or the flation. He can't say that now and it'll be interesting if he comes out and actually it myths because again, stagflation is the bogeyman. Stagflation is a worst case scenario. The Fed is F'd if our economy goes into that because they can't fight two two battles at the same time. They're going to have to pick one and I don't know this is going to be the one that we want them to pick. I was trying to check on mortgage back securities and for some reason, my my MBS highway logins change. So I'll stop being distracted trying to check that out. But

11:31yeah, we'll we'll see what they say. And then it'll be interesting to also see, like you said, if some people start talking about hike, what what that's going to look like on a future Fed meetings, you know, which as of late, it's just been stay the same or cut. Right. And, you know, what's not an option. That's I don't think they can do that anymore. I think up it has to be an option. Hike hike is going to be an option. You jump on cow. She see if you want to bet it. I look today just for fun, Mike. And you you were getting about 32 to one odds on a cut. You know, so bet 25 bucks win 800. Yeah. If you bet there was going to be a cut today. And then they were so certain there wouldn't be a cut that I couldn't put in a number. It wouldn't allow me to bet. You know, I wasn't I wasn't going to bet. I was just checking the odds. And it basically, you know, betting closed. Do you have someone who wanted to bet $5,000 to win 10 or something? Yeah, it couldn't happen. Yeah. Again, I think today's a big nothing, but again, it's not about

12:33today. It's about the message. It's about the future. And you're right. Jerome Powell has a short term. He's short term now. He's done in May, right? It's like two months away. And yeah, it's almost his swung song. He's got one more meeting after this. And it'll be interesting to see how he goes out. Just just a quick hike before he leaves. Yeah, exactly here. One, one, one, little finger before he steps out the door. Peace. Here's a hike for you. 50 basis point hike. See you later, guys. Yes, peace. Burn it down. Burn it down. Oh, man, it's going to be a crazy day. Matt, I always appreciate you. I do think we need to talk about hikes. I agree with you. It does hurt most of the market, but one rental at a time, fans who have a buy box disrespectful offers, follow, follow, follow, follow your your opportunity to find motivated sellers has never been better. Matt, where can they find you? Go to mtmg.com, fill out a quick form. Do me a favor, put some notes in there. I got a call this afternoon. And this, oh, you know, O rat, one rental at a time,

13:36community member, did it perfect. I'm an O rat guy. I'm in Tennessee. I've got too many, you know, conventional properties. I got to do a DSCR loan. I love that. Just going into the call. I know we're going to talk about and I know where you're at and and how I can help. So yeah, mtmg.com, dual call with me and the team. Let us know where you're at and what you're looking to do and we'll jump on a call and add value and help. Anyway, we can. There you go, buddy. I appreciate you. Have a good week. All right, you two. Thanks, Mike.