The Federal Reserve’s 50 basis point cut has ignited market chatter among America’s real estate leaders who think this could be the start of a buying and selling frenzy.
“Everybody’s happy. It doesn’t matter what type of business they are in,” Shoma Group founder and CEO Mousad Shojaee told Fox News Digital in reaction to the decision on Thursday.
“The atmosphere and attitude since yesterday has been changed completely,” he continued. “Everybody, they see a smile on their faces, and you have the energy. It’s like they have all their lights on because it’s been four years.”
Compass Regional Vice President Jeffrey Polashuk also voiced support for the cut.
“I believe that a lot of the rate cuts were already baked into finance pricing, but the positive news of this change will ensure that people won’t delay their search any longer. This rate cut paired with the election season ending in the next two months will be the trigger that will propel people back into the market,” he told Fox News Digital.
‘SHARK TANK’ STAR BARBARA CORCORAN REVEALS WHEN HOUSING PRICES ‘WILL GO THROUGH THE ROOF’
Investors and market watchers sat on the edge of their seats Wednesday afternoon, as the Fed announced a long-awaited interest rate cut, lowering the benchmark rate by 50 basis points from what was the highest level in 23 years as the central bank eased borrowing costs following progress in the fight against inflation.
The Fed’s first interest rate cut since March 2020 lowers the benchmark federal funds rate to a range of 4.75% to 5%.
Federal Reserve Chair Jerome Powell said in a press conference following the announcement that the central bank is focused on “achieving our dual mandate goals of maximum employment and stable prices for the benefit of the American people.”
For real estate brokers and their agents, the Fed’s half-of-a-percentage cut is likely to bring more buyers and sellers to market, potentially opening the inventory floodgates and momentum for price competition.
“We know that the mortgage rate is not connected to the Fed rate, but obviously has a huge impact,” Shojaee said. “Many of the mortgage lenders now see the same mortgage dropping to 5.9% in 45 days. And that’s huge. So we are going back to kind of a normality… it created consumer confidence, which is very important. And then, obviously, the interest rate goes down, then there is demand, and it becomes a supply-demand issue as the prices are going to go up again.”
“Our agent team is extremely excited as this is positive news that they can share with their clientele to get buyers reengaged for the search,” Polashuk added. “With the South Florida market being a place new residents have been coming down to for work opportunities and the area continues to boom, this opportunity helps the folks who have been renting to have the confidence to put down solid roots and make Florida their home.”
Moving forward, Powell emphasized that future rate decisions will happen on a meeting-by-meeting basis and depend on economic data, and said, “we can go quicker if that’s appropriate, we can go slower if that’s appropriate, we can pause if that’s appropriate. That’s what we’re contemplating.”
The perfect formula for a healthy housing market, according to the industry leaders, would include more rate cuts and an emphasis on affordable new builds with plausible legislative action around developer subsidizing.
“Getting to the 50-point cut was the confidence we needed to ensure that the lower rates we have seen remain intact. We expect the rates to continue to come down over the next year, which will increase consumer sentiment to get off of the sideline and make life decisions they have been holding off on,” Polashuk explained.
“It took four years to get to this point, and it’s going to take a while to get out of this kind of… soft landing,” Shojaee noted. “I’m really hoping and praying to see another cut this year, and the chances are high.”
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But, the Shoma Group CEO believes that the government on the federal and local levels have not “done enough” to address the housing crisis and inventory shortage.
“There has to be better moderate, affordable housing,” he stressed. “And that’s what the government has to pitch in and help the developer come up with incentives.”
“Obviously, I think we are seeing a light at the end of the tunnel, and that’s very important,” he added.
The Federal Reserve’s next policy meeting will be held Nov. 6-7, right after Election Day on Nov. 5, while the final meeting of the year will be held Dec. 17-18.
FOX Business’ Eric Revell contributed to this report.
