The Fed’s Losing Grip: What Rising Rates Mean for Real Estate and Your Investments
I’ve seen a lot of market cycles over the past 30 years, but what we’re witnessing right now is truly unique. Despite their best efforts to manage interest rates, it’s the Fed is losing control.
Let’s break down what’s really happening—and what it means for your investments.
Why Rates Are Rising Despite the Fed’s Moves
The Fed’s dual mandate is to maintain stable prices (inflation) and low unemployment. Traditionally, they’d adjust rates to achieve this balance. But even as the Fed signaled potential rate cuts this year, the 10-year Treasury yield—a key benchmark—has been moving up.
Why? Because the bond market is calling the shots.
Investors aren’t waiting for the Fed anymore. They’re demanding higher yields to offset inflation and economic uncertainty. If inflation is eating into returns, investors expect more than the 3–4% yields we’ve seen in the past. That’s why we’re seeing mortgage rates jump back above 7%, despite the Fed’s attempts to guide them lower.
How Tariffs and Global Tensions Play In
Tariffs and trade tensions are adding even more uncertainty. The U.S. dollar was recently downgraded by ratings agencies, reflecting concerns about long-term debt and fiscal management.
Foreign investors, like those in China, are growing wary of holding U.S. Treasuries. This lack of demand forces yields up, which pushes borrowing costs up—whether you’re a homebuyer, an investor, or a developer.
Real Estate: Feeling the Pinch
For real estate, higher yields and mortgage rates have an immediate impact:
✅ Affordability is down. Homebuyers’ monthly payments have nearly doubled since 2021. Even a slight drop in rates triggers a rush to buy—because buyers are feeling squeezed.
✅ Home sales are slowing. Nationally, inventory has grown beyond 2019 levels, tipping us into a buyer’s market in many cities.
✅ Sellers who have to sell… are cutting prices. Divorce, job changes, or cash flow issues are forcing some owners to drop prices. But most homeowners, with rates under 5%, are holding firm.
✅ Rentals are tightening. As fewer people can afford to buy, demand for rentals grows. We’re already seeing rent prices stabilize and even start to rise again in markets with limited new supply.
Stagflation: A Real Risk?
Many economists I’ve spoken with—including at a recent event with George Gammon—see a real risk of stagflation ahead: high inflation, high unemployment, and slow growth.
We haven’t seen that since the 1970s, when Paul Volcker had to jack up rates to 15% to break inflation. But here’s the difference: today’s housing market doesn’t have the same oversupply problem. Back in 2008, there were 4 million homes on the MLS. Today, there’s only about 1 million.
Homeowners are sitting on significant equity. That’s a cushion that wasn’t there last time.
So… What’s Next?
The truth is, even if the Fed cuts rates, it might not matter if the bond market doesn’t follow. If investors demand 5–6% returns on bonds, mortgage rates will stay high, regardless of what the Fed does.
But here’s what I believe:
✅ If you’re sitting on a low-rate mortgage and your property cash flows—don’t panic. Focus on your rent growth and long-term value.
✅ If you’re in a property you don’t want, now is the time to 1031 exchange before pricing softens further.
✅ If you’re looking to invest, watch rental demand. With new construction stalled and buyers locked out, rental demand will likely surge in the next year.
✅ And remember: the cure for high prices… is high prices. Eventually, prices will stabilize as affordability forces a correction.
Final Thoughts for Investors
I’ve been through enough of these cycles to know that market uncertainty always creates opportunities. While the Fed is losing control of interest rates, that doesn’t mean you have to lose control of your strategy.
If you’re as unsure as I am about where this market is heading, join me and Robert Kiyosaki on Thursday for a free livestream. We’re going to dig deeper into the dollar, interest rates, and how to protect your wealth in this shifting market.
And don’t forget—Limitless Expo 2025 is coming up in July. We’ll have 50 speakers, 2,000 investors, and the smartest minds in real estate and economics all in one room. Let’s figure this out together.
Stay informed, stay adaptable, and I’ll see you at Limitless.
