This Inflation Report Changes Everything For Home Buyers

So let's jump right in. So today at Congress, Warsh said specifically, don't look at one CPI report and think everything is fixed, right? Which I thought was great. It's a great way to say it, because this is obviously good, but the oil issue is not solved. We still have a reserve problem. You know, as Chris Martinson talked about, as he's gonna really, he's gonna do one of our keynotes at Limitless in next month, talk all about what's going on with oil reserves, the straights, and he's one of the, obviously the experts around that, but I kind of agree with him. Yeah, there was that. And he also, Warsh also said, there was no tolerance for persistently elevated inflation in the Fed. So they are saying basically, we're not okay with inflation staying at 3.5%. Our goal is still 2%. We're still going to be focusing on that. And a lot of, we might not see any rate cuts until we're in the twos, because if we start cutting rates, that's gonna accelerate inflation. And if they're really serious about hitting 2% or two and a half percent, three and a half is still too high. And then to your point, we don't really know what's going on with energy. I mean, the oil crisis could get worse before it gets better. And if you talk to somebody like Chris Martinson, he'll tell you that it is going to get worse before it gets better, which is why Warsh, remember Warsh was pushing to not include energy in the inflation reports moving forward. He made that argument. They haven't done that yet. But if the only way you're going to see rate cuts is if they are able to take energy prices out, if they really want to get down to two and 2%. Right, which is the core CPI, which we showed earlier. And again, he said one good month doesn't mean the inflation fight is over. And I think he's right about that. But it does take a little bit of pressure off of this next meeting. I think that's important. One thing that he brought up at Congress today is AI as a new topic. And I know it's been talked about if you go back into their notes. But he said that the Fed is beginning to study whether AI will one, increase productivity, which is what everybody would want, two, change hiring, which I think has already happened, and three, affect inflation over time. So that also came out. And I think that's something to watch. You know, we've talked a little bit about that. I don't want to go down an AI rabbit hole right now. But the reality is that's going to affect the unemployment rate, which is, of course, the other piece that the Fed has to navigate. So it's going to be really, really interesting. And I'll tell you, I'm really excited about this all kind of coming to a head for Limitless, right? This year, obviously in Phoenix, August 14th, 15th, 16th. And, you know, we're bringing a panel of AI, people speaking about AI, and a panel on energy. And it's going to be really, really interesting topics. What do they see? Absolutely. And, you know, why does this matter for real estate? For those of you that are investing in real estate or maybe even just looking to buy a house? Well, it matters because if you have a bunch of equity that's locked up, which is a huge amount of money, I mean, this is really what everyone's after. Mortgage companies are after it. Wall Street's after it. Trump's after it. Everybody's, and I can't remember exactly the number. I mean, I looked it up once, but it's in the trillions of dollars of what they're considered trapped equity. And for a lot of you that have a lot of equity, you might not consider it trapped equity. I certainly don't. You know, we like to pay things off as well. I like not having debt on a lot of stuff. I like having debt on things that other people pay off, but I don't like having debt on things that I own personally, you know, just because. And so there's a lot of people in that camp. There's a lot of people that have paid off homes that are in that category. They don't really care. They're not going to be dipping into this lower rate and throwing a HELOC on there or anything like that. But I do think there's a tremendous amount of people, we know there are, that have looked at the price they paid for a home, the amount of equity or amount of debt they have in their payment, and it's better off than renting. So they're renting their place and moving somewhere else and their money's sitting in. So they became like these default landlords. There's a fair amount of those people out there. Some people have tried the Airbnb game. Now, of course, I'm focused on single family at the moment, but there's lower rates unlock a tremendous amount of money. Mortgage companies, they're realtors. Everybody becomes very, very happy. The amount of inventory starts to go down or at least it should, you know, if the payments are starting to make sense. On the other side of that, on the commercial side of that, we've talked a lot about the debt wall, which is debt matures, you know. So office buildings, retail buildings, multifamily buildings, whatever it is, you find that debt matures. And so like we have multiple things that are maturing. We have two deals that are maturing in the spring of 2027. And so today we're already working on those because guess what? Our interest rate on those deals is lower than the prevailing interest rate today. So if it matures, then everyone's in this situation where it has to renew at a higher rate, which means a higher mortgage payment, which means less cashflow. You just flip a switch literally, and all of a sudden your mortgage payment goes up, you have less cashflow, all things being equal. So you have all this stuff going on on the real estate space that if we can get that 10 year down, the two year down, and the Fed stays neutral, I think that they live another day. Yeah, it's month to month, right? As far as the rates go, even worse said, they don't know what they're going to do. They're not planning, they're not giving any indicators. So really it's on the administration, and the administration knows this, to try to keep energy prices down. Really hard to do in the wake of everything with Iran. Our stockpiles are lower and lower, but we can continue to drain those just to keep the energy prices down. And I think that they will do that, just knowing that this is kind of that catch 22 really comes down to energy right now. And I think it's important to note that the markets are celebrating not because inflation is actually low. Inflation is still pretty high, 3.5% is still high. They're celebrating because it's coming in lower than it was expected. Yeah, I think that's it, right? Like, and so obviously this is great news, which is really interesting news to me, because to me, not a lot's happened on oil. Yeah. Other than, well, we don't go down a political rabbit hole here, but the point is is that we, I don't feel like we're in much different situation than we were 30, 60, 90 days ago. Right. When it comes to the oil issue. But that is interesting. So I'm wondering if, you know, and we're gonna get consumer sentiment readings and different things for the rest of this week, but I wonder if consumer spending is softening, because, you know, if you take oil out of it and our inflation is going down, that means other, the prices of, or not the prices, but the acceleration of inflation is going down in other markets as well. So you're kind of wondering where are those dips and where are people not spending money right now to soften that inflation? It isn't, well, I did look at a lot of this and I think that if you guys can go online just like I did, because I literally just went online and said, you know, I know the CPI went down. Where did it, why did it go down? And what areas and where did it go up? Because, of course, there are definitely areas that went up and there are definitely areas that went down. In this particular case, there are more, obviously, that went down. All really focused mostly around energy. So if that continues, great. You know, you're not gonna have any issue on the rent side, which I already talked about. And, you know, so this really could be an interesting, if it happens again, it really, really, really, really could be interesting. We could be, obviously, looking at potentially rate cuts, which is what everybody wants. But, you know, that's- Well, also, if Warsh can get what he wants and not read energy into the inflation reports anymore. One thing is true, there's more buyers are gonna jump back in the market. This is- If rates go down. If you look at the last, people thought rates were going up, right? So that you take your foot off the gas, right? And maybe even hit the brake. But also affordability improves, right? And so those are obviously very good things for everyone. That's what everybody wants. Right, right. And right, because, you know, if there's better sentiment, better sentiment does attract buyers. If buyers think rates are gonna go down, they kind of jump on the bandwagon. We saw this in January, where they think, okay, rates are gonna go down, I better get in because once rates start going down, prices go up, and they know that. So you do, you know, this will be interesting to see if this spurs any kind of home buying just with this good report. And one of the guys that's coming to Limitless, Jeff Snyder, educated me on one very important piece. He corrected me, actually. He said, the Fed will always be reactive. So the administration does what it does, like oil, you know, the Straits, war, whatever it is, and then the Fed's reactive. So a lot of people think that, you know, the Fed creates a lot of this, and it's true. Maybe some of their moves do, but they're typically reactive and this would be one of those scenarios where they're also going to be reactive based on the data that they have. So it's just important to kind of take your focus off of that a little bit, at least, and focus on, you know, some of the bigger picture. Why is the Fed making the moves that they're making? It's a result of other things. Absolutely. Well, we will see you guys next week. Make sure you check out our podcast, The Ken McElroy Show, which airs on Thursdays. See you guys. If you're an investor or a business owner right now, you already know that the market has changed. Rates are different, debt is different, and capital is different. And the assumptions that worked just a few years ago are not the assumptions that you would use today. That's exactly why I am inviting you to Lendilus 2026. This is three days this year in August in Phoenix with investors, business owners, entrepreneurs, high net worth accredited investors, and more. And they're all asking the very important questions. Where is the opportunity right now? Where are the risks hiding? And what do I need to protect? And where should I be positioning for the next 12 to 24 months? We're gonna be talking about real estate, macro debt, taxes, AI, asset protection, and where capital and business is moving next. If you're serious about building wealth and protecting your assets in this environment, go grab your ticket and I'll see you there.