Rental Property Investing Update - December 18, 2024

Published: December 18, 2024

Fed rate cut

At 2PM EST this afternoon, the Federal Open Market Committee (FOMC) cut the Federal funds rate -0.25% to a target range of 4.25% - 4.5% and revised expectations that there will just be 2 rate cuts in 2025 instead of the 4 cuts estimated at the previous meeting in September. The FOMC's committee members revised their expectations for higher GDP growth and inflation relative to "dot plot" expectations set at the September meeting.

The market's immediate response, sent the 5 Yr US Treasury up from 4.245% to 4.33% with the fed funds futures market largely resetting expectations in line with the FOMC's revisions.

During Fed Chairman Powell's press conference, the 5 Yr Treasury rose further to 4.385% before peaking at 4.4% -- his prepared remarks and Q&A always have the potential to move the market beyond the initial press release.

5 Yr US Treasury Rate

Homebuilder sentiment

December reading came in today at 46 (slightly negative as 50 is neutral), unchanged from November.

Housing starts

Housing starts unexpectedly declined 1.8% in November compared to October. Single family was +6.4% while multi-family (5+ unit) was -24.1%. Starts decreased in the midwest and west, increased in northeast and southeast.

Building permits

Building permits increased 6.1% in November compared to October. Single family was +0.1% while multi-family was +22.1%. Permits increased in all regions.

Mortgage applications

Mortgage applications decreased last week after 5 straight weekly increases.

Credit spreads

Credit spreads increased 0.05% to 0.35% across fixed income asset classes over the past month.

DSCR Loan Interest Rates

DSCR loan interest rates for 1-4 unit residential investment properties increased to 7.646% (market) and 7.37% (OfferMarket) in line with the increase in the 5 Yr US Treasury.

Off Market Properties

There are 623 off market properties for your review on our investment property marketplace posted by wholesalers, tired landlords and distressed sellers.

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