Hi Friends,
Let’s be real, this market is confusing. Between headlines, Fed talk, and mortgage rate swings, it’s no wonder buyers and sellers are on edge. But here’s the truth that rarely gets said out loud: pricing isn’t a feeling, it’s math.
And right now? The math tells a story that’s easy to miss if you’re not paying attention.
The Bond Market’s Drag Is Holding Mortgage Rates Up
The U.S. bond market is in its longest slump ever, over five years and counting. Even if rates stay flat, we’re still looking at another year before bonds fully bounce back. Why does that matter to you? Because when bonds are struggling, mortgage rates stay elevated.
This long dip is being driven by three things:
High levels of government borrowing
Persistent inflation
The big question mark around what the Fed will do next
Even so, investors are still buying U.S. Treasuries, especially overseas. Why? Because those yields look good right now. But most of that new debt is short-term, and nearly $11 trillion comes due by 2026. That’s a lot of pressure building.
Job Market’s Cooling Off, And That Might Tip the Fed
Hiring has slowed down. We’re now seeing the weakest three-month job growth in over five years. That’s a big deal, because a softer labor market means the Fed is more likely to cut interest rates, possibly as soon as September.
Markets are already betting on at least one or two cuts by the end of the year, with more likely in 2026. If that happens, short-term rates should ease, and we may finally start to see some relief in mortgage rates. Emphasis on some. This won’t be a straight drop. More like a slow melt.
The Big "Ifs": Inflation and Employment
This entire forecast rides on two variables: inflation and jobs.
If inflation picks up again (it's still sitting at 2.8%, above the Fed’s 2% target), rate cuts could be pushed back.
If hiring slows further, those cuts might come faster.
This is why timing the market is so tricky. These two forces are pulling in opposite directions and both are unpredictable.
Real Estate’s Core Story? Affordability.
Let’s talk real estate. Stocks are flying high, but real estate stocks? Still stuck below 2022 peaks, especially commercial property, which has been hit hard.
Residential housing isn’t much easier. Right now, it takes $124,000 in income to afford the median-priced home, while the actual median U.S. income is just $79,000. That’s the widest affordability gap we’ve ever seen.
But here’s where it gets interesting: inventory is rising.
More existing homes are hitting the market.
New home inventory is at the highest level since 2007.
Sellers outnumber buyers by almost half a million.
Translation? The heat is cooling off. Home prices only rose 2% over the past year, and in some big markets, prices have already started to dip. Meanwhile, rents are falling for the second year in a row, making renting cheaper than owning in all 50 of the largest metro areas.
If you’re buying, this could be your moment to negotiate. If you’re selling, strategy matters more than ever.
This Week’s Market Movers: What to Watch
Here’s what could shake things up this week:
Friday – Powell Speaks at Jackson Hole
Expected to hint at a September rate cut—but don’t expect fireworks. If he confirms it? Bond yields could fall and mortgage rates may follow. If he plays it safe? Expect more volatility.
Midweek – Mortgage Apps, Fed Minutes, Treasury Auction
Want to know how buyers are reacting to current rates? Watch mortgage application numbers. Meanwhile, the Fed’s meeting notes will tell us just how close we are to a cut.
Thursday – Jobless Claims + Existing Home Sales
Higher unemployment? That supports rate cuts. Slower home sales? That means more pressure on affordability and possibly, better conditions for buyers.
Buyer Windows Don’t Last Forever
Here’s a tough truth that history makes very clear: buyer-friendly markets are short-lived. In the last 70+ years, home prices have gone up about 70% of the time. Sellers usually have the upper hand.
Buyers? They get brief windows, typically during downturns or high-rate environments, before the market swings back toward sellers. Sound familiar?
Prices have more than doubled in the last 20 years.
Mortgage rates always cycle. When they drop, buyers rush in and prices climb.
Supply takes years to build, but demand can return overnight.
If you’re waiting for a big crash, don’t hold your breath. The last time we saw a buyer’s market (2008–2012), prices dropped—but within five years, they had fully rebounded.
Right now, we’re in one of those rare windows. Affordability is tight, but inventory is up. Mortgage rates are likely to fall, but once they do, competition returns fast. In hot markets like the Bay Area, it’ll happen even faster.
Inventory Tells the Future. And Permits Tell the Truth
Want to know what housing supply looks like in a few years? Watch building permits. Right now, permits for new apartments are down 23% from the pandemic peak.
Why? Builders are pulling back:
Borrowing costs are high.
Rents are falling.
Vacancies are rising in some cities.
That’s already starting to impact rental markets. Rents are creeping up again (+1.7% YoY), and fewer permits today means tighter supply in the future, for both rentals and homes.
Some markets (like North Port, FL and Austin, TX) are still building fast. Others (like Stockton and Bakersfield, CA) are barely building at all. On the West Coast, places like San Jose and Colorado Springs are seeing some of the steepest permit declines.
If construction stays slow and demand picks up? Expect prices to rise again.
Bottom Line: If You’re Ready, Don’t Wait for Perfect
Let’s be clear: this isn’t a push to stretch beyond your means. But if you’re in a position to buy, and you’re waiting for “the perfect time," you could miss your window.
Supply is up. Competition is down. Mortgage rates might ease soon, but when they do, so will buyer hesitation. The sidelines will get crowded fast.
You don’t need to time it perfectly. You just need to act when the odds are in your favor. And right now, for many buyers, that moment is here.
If you’re unsure where to start, or need help navigating your market, I work with some of the best agents in the business. Reach out anytime—I’m happy to connect you with someone who knows how to win in this market.