Every week, I talk with clients about their ideas and goals for the near future - five years.   Most everyone is holding off on moving forward with large purchase decisions, especially in real estate, until after the election. Often, I find myself asking them, “What do you expect after the election?” The answer is commonly the same: “that prices will go down and so will interest rates, making everything more affordable.” Ahh … if that were only possible.   

Harris and Trump have very different approaches to public policy, setting up a 2024 election with grand promises for the U.S. economy. While a recession in 2024 is not likely, it is expected that consumer spending and the GDP growth will continue to slow on a quarterly basis through 2025.

Factors that are sure to impact the cost of consumer goods are increased tariffs on all goods imported to the U.S. which will continue to push prices higher. As a result, inflation will continue to put pressure on the Federal Reserve Bank to keep interest rates higher to curb consumer spending.  A vicious monetary cycle. Back in 2021, mortgage and consumer interest rates were 3% enabling everyone to lower their overall housing and consumer debt monthly expenses. Since 2023, mortgage rates are twice as high with no limit on what credit card companies can charge.  

Essentially the historical data reflects that investment returns are more dependent on economic and inflation trends rather than election results. As of June 2024, the US inflation rate was 3.0%, which is down from 7.0% at the end of 2021 and 6.5% at the end of 2022. Surprisingly since World War II, the national economy has performed better under Democratic presidents than under Republican presidents. Regardless of who is president, it is Congress who sets the income tax rates, passes spending bills and writing laws that regulate the economy.   

The economists that I follow say keep a pulse on the stock market trends for the rest of 2024 going into 2025. Essentially once corporate earnings start to decline, a shift will begin to sell stocks and move money into the U.S. Treasury bond market for safety and security during market volatility periods.   

Because this will impact the treasury yields on mortgage-backed securities in bonds that dictate daily mortgage rates.  

As bond values increase, mortgage interest rates decrease, and vice versa. A decline in mortgage rates from 7% down to 5% would be the average economic market norm.  

Don’t wait any longer for mortgage and consumer rates to come back to the 3% level because it isn’t likely in the next decade.     

With this knowledge in place, consumers can make educated choices to move forward with their goals and dreams. Don’t let the emotions of the political rhetoric promises influence your decision making. Take time to recognize what your motivation is in detail. Combine this with your belief system and perception of what is the right vs wrong; time to move forward. Then map out a detailed plan that is revisited several times per year.   

Be sure to discuss your vision with your trusted advisors in investments, taxes and mortgage debts. If you are seeking a new trusted advisor and aren’t sure who to call. Send me a message and I can share with you quality hard-working licensed California advisors in every aspect of life. Bringing people together for a common goal is what I enjoy most in my day-to-day work life. Creating solutions for visions and life goals.