Federal Reserve decides against rate increase

The Federal Reserve voted 9 to 1 on Thursday, September 17th not to raise interest rates. What does that mean for the US economy?

With the Fed not raising rates it is a clear signal that the economy is not in good shape. The Fed recognizes this and that was the determining factor for not increasing the rate. We have been at zero for over six years. With the inability to get decent returns on CD’s or money market accounts investors are forced to seek riskier products to generate higher rates of return. While the current Administration touts an unemployment rate of 5.1% it does not address the lack of labor participation, which is at its lowest rate since the 1970’s.

How does this affect the real estate market? The Fed is scheduled to meet two more times this year, October and December. In our opinion, it is unlikely that there will be a rate hike between now and the end of the year. We have been advising our clients since the beginning of the year to take advantage of the low interest rates and, if they haven’t already, refinance their properties immediately.

A more pressing issue is property assessments and taxes. With the low interest rates, driven by the liquidity provided by the Federal Reserve, property values are increasing. As such, state, county and local governments are seeking higher taxes to offset the deficits on their budgets, particularly due to their unfunded pension liabilities. Appeals need to be filed on a timely basis to contest the higher assessments.