Quick Econ Chats: Fed Reserve Increases Rates +.25%

As expected (and as we discussed in our March Newsletter), the Federal Reserve just lifted its benchmark interest rate for the first time sine 2018 by +0.25% (25bps). According to Financial Times, this increase signals a series of increases this year, with an expected 1/4 of a point rise at all of the six remaining meetings of 2022.

The rise in rates is a way to fight increasing inflation in the U.S., as consumer prices jumped another 0.8% in February. While this action should help with oil/gas prices, the reduction at the pump will come slowly.

The good news is that job openings for January remain elevated at 11.3 million according to C.A.R.. California’s job market remains strong, with an added 2.3 million of the roughly 2.8 million jobs lost at the start of the pandemic in 2020. Our state’s unemployment rate is currently below 6% in the last 3 months.

What does this mean for the homeowner or potential first-time home buyers? Well, California’s home prices have seen one of biggest growth in home equity (by dollar value), thus giving the state the lowest rate of “negative equity” (sellers under water) across the nation, keeping the California housing market robust and competitive. According to C.A.R., demand remains unexpectedly strong with homes selling above listing price in short periods of time.

Not only is this a continuing great time to sell your home, but a perfect time to take advantage of the current mortgage rates before we see more interest rate hikes.