Well, it finally happened.

In a highly anticipated meeting in early November 2023, the Federal Reserve chose to leave interest rates untouched – keeping 30-year fixed mortgage rates at 7.69%.

Why is this important for real estate investors to know? 🤔

Well, as you may have gathered by now, interest rates and inflation are closely tied together and have big impacts on the economic landscape and real estate market. They affect many parts of the economy, from mortgage rates to housing prices, and consumer rates to stock market movements. 

So, not only do real estate investors need to know what’s going on with interest rates for purchasing properties and making investment decisions, everyone should be aware of the effects these changes may have on everyday financial decisions.

The tricky thing is, it can be hard to get to the bottom of these big financial headlines. Like, can we get a simpler explanation, please?! 

The short answer is YES. 🙌

We’re here to make it all much clearer and put the Fed’s decision into easy-to-understand terms for you. Let’s explore what exactly is going on with interest rates, how it affects inflation, and what it really means for real estate investors – so you can stay informed and make the right decisions for you! 

First of all, what’s going on with interest rates? 

Stick with us while we chat through some stats, okay? We promise to make it all make sense. 😉

The Federal Reserve has been trying to cool down the economy for some time – since the spike of inflation in 2021. Since then, rates have been increased 11 times, and the current Fed funds rate is now between 5.25-5.50%.  

By choosing to leave interest rates unchanged, the central bank is deciding not to continue its aggressive attempts at lowering inflation through spiking interest rates – at least for now. 

This is a good sign because it means that inflation rates are starting (slowly) to come down, but we’re definitely not out of the woods yet. The Consumer Price Index, which offers a useful gauge of where inflation is at, saw a slight increase but rested at about 4% in October 2023. 

If you compare this to the height of Pandemic CPI readings (9.1% in June 2022), this is a HUGE improvement, right? 

So, yes… inflation is trending in the right direction, but the Fed plans to keep working towards their 2% goal, and will take the interest rate decisions one month at a time for now. 

There is reason to believe that inflation will continue lowering, but there’s still one part of CPI that continues to rise, putting continuous strain on finances and consumer prices. 

It’s housing prices. 🏠

The shelter component of the CPI accounts for 70% of the total increase in consumer goods costs, which means that housing prices are still on the rise, impacting financial decisions of homeowners, investors, and developers alike. 

Why are housing prices still on the rise with interest rates paused?  

Despite no change in short-term interest rates, many real estate investors and prospective home buyers are still a bit nervous about the future of real estate. 

That’s because in order to reach the goal of getting inflation down to about 2%, the Fed is actively trying to lower its balance sheet by taking liquidity out of markets without reinvesting the proceeds. 

As of now, the Fed has lowered its balance sheet by $900 billion and will continue its efforts moving forward. 

The effects on the housing market are as follows: 

• Increased single-family home prices
• Restricted liquidity for lenders
• Bigger yield requirements for commercial real estate
• Higher long-term interest rates

We’re also seeing an upward pressure on cap rates, which affects different properties differently – depending on things like property performance, asset type, land location. 

But of course… we’re here to bring the GOOD news, not stress you out or scare you away from real estate. 

In fact, we think you’ll find that all of this info makes real estate investing much more appealing – at least, the way the Kitti Sisters do it. 😉

Multifamily apartment investing is the best way to navigate inflation, high housing costs, and shifting market dynamics

It’s always good to keep tabs on what’s going on with the economy and housing market because it’s best to make financial and investment decisions based on knowledge and data – especially when it comes to real estate. 

But here’s the thing. There’s not going to be a “perfect” time to get into real estate investing based on the stats. What we mean is, we don’t want you to wait until the market is fully stabilized or inflation comes down to the Fed’s goal of 2%. 

Why? Because multifamily apartment investing is STILL the best option for real estate investing – even in the face of market changes. 🤩

This holds true for a few key reasons…

• High demand and low supply

There’s limited inventory out there, hiking prices up and sending people into the renter’s market. By investing in rental properties (specifically multifamily apartments) you’re filling a need for more housing supply. 

• Rent can be adjusted to keep up with inflation

By setting lease limits, rental property owners can keep up with and adapt to inflation changes – raising or lowering rent as needed. 

• Appreciation

As property prices increase, the value of multifamily properties will as well, offering appreciation over time. This makes multifamily apartments an excellent hedge against inflation, and multifamily investing will continue to be a great long-term investment strategy. 

• Increase in long-term renters

With the high cost of single-family homes, home buyers are choosing to rent instead. The thing is, they still want to settle down and stay for a while, leading to less vacancies and turnover for apartment investors. 

Thaaaat means more money in investors’ pockets! 💸

How to hedge against inflation and grow wealth through multifamily investing

The point of bringing all of this to your attention is to help you understand that you always have options.

Can anyone know for certain what the future holds? 

Of course not! But as housing prices, mortgage rates, inflation, and the real estate market all go through various changes, you can still find your way to wealth and financial freedom. The stability of hard assets makes apartment investing a great option for creating a better life and future, while navigating the changing economic landscape. ✨

Don’t let fear and uncertainty stand in your way a second longer. 

If you want to enjoy the stability, passive income, and inflation-friendly perks of multifamily apartment investing, then we are here to help guide you, every step of the way! 

The Kitti Freedom Club gives investors access to market knowledge and resources, amazing investment opportunities, and a team of pros to lay out the path to your financial dreams and goals. 

Join the Kitti Freedom Club to start your investment journey! 👏

In the last five years, the US had a slight drop in occupancy. But certain smaller apartment markets, such as Boise City, Gainesville, and Deltona, did way worse because of lots of buildings and lower demand since the pandemic. Places like Crestview and Augusta also saw fewer people in their apartments. Among the big cities, only Jacksonville and Phoenix had occupancy drops similar to these smaller places.

FYI:  For us, the Kitti Sisters, those cities listed aren’t where we’re focusing our attention.

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