Christopher Rugaber of ABC News reported earlier this week that the Federal Reserve is expected to cut interest rates by a quarter-point tomorrow, following a previous cut in September, as inflation continues to cool, now down to 2.4%. This marks a shift from the Fed’s last rate hikes aimed at controlling inflation, which spiked to 9.1% in 2022. Rugaber notes that the presidential election will unlikely impact the Fed’s decision. However, economic policies under a new administration could influence future rate cuts, particularly if inflationary pressures rise.

Ayelet Sheffey and Madison Hoff of Business Insider agree that the Fed will cut interest rates by 25 basis points, following a 50-point cut in September, as inflation cools and the economy remains solid. The underlying labor market remains strong despite a slowdown in October’s job growth due to strikes and hurricanes. The Fed anticipates another quarter-point rate cut in December, though future cuts depend on economic data and market conditions. This continued easing aims to support the labor market and overall financial stability.

The CME Group’s FedWatch predicts a 98% chance of a 25 bps rate cut as of Tuesday.

Source: CME Group (November 2024)

Hannah Jones of Realtor.com highlights that the October jobs report showed a sharp slowdown in job growth, adding only 12,000 jobs compared to the 12-month average of 194,000, which contributed to rising mortgage rates in response to more robust September employment and inflation data. This rate rise may dampen housing market optimism as buyers delay purchases, hoping for lower rates. 

Jason Schenker of Forbes reports on the October jobs data showing the weakest payroll growth since December 2020, signaling a significant slowdown in the labor market. While hurricanes may have contributed to the weak numbers, it’s unclear how much of the impact was due to the storms. Despite this, unemployment remained at 4.1%. The slowdown and downward revisions to previous months’ payrolls increase the likelihood that the Federal Reserve will cut interest rates to support the labor market and economic growth.

Source: Forbes (November 2024)

Real estate commissions

Mark Worley of Redfin reports that since the new real estate commission rules were implemented in August 2024 following the NAR settlement, buyer’s agent commissions have remained steady, averaging 2.34% in October, down only slightly from 2.35% in August. While commissions for homes under $500,000 have risen slightly, those over $500,000 have decreased. Overall, commissions have fallen 17 basis points since January 2023. 

Source: Redfin (November 2024)

Redfin Chief Economist Daryl Fairweather comments:

“Commissions may face more downward pressure next year if we see a resurgence of bidding wars. Sellers are becoming increasingly aware that commissions are negotiable and that if they have a desirable home, they may be able to get the buyer to cover some, or even all, of the buyer’s agent commission…Of course, as in all real estate deals, any negotiation is dependent on how much demand there is for a property. Sellers who are struggling to find a buyer may even offer more to help attract more interest.” 

RISMedia released its own commissions report, although not publicly available, which shows that “confirms that commissions did in fact drop after the Aug. 17 deadline for the National Association of REALTORS’® (NAR) settlement agreement, which removed compensation offers from the MLS and made buyer agreements mandatory (among other things). After rampant speculation and some unconfirmed early reports, the news that commissions are falling is concerning.”

Jim Dalrymple II of Inman reports on ongoing commission lawsuits, noting that a judge granted the final approval for nine settlements involving major real estate companies, including Compass, Douglas Elliman, Redfin, and @properties. The companies will collectively pay $110 million to resolve the litigation. Compass is responsible for the largest share, contributing $57.5 million, while United Real Estate will pay the least at $3.75 million. 

Mike Scarcella of Reuters reports on this issue, highlighting that the above-noted settlement follows a wave of lawsuits alleging that major U.S. brokerages violated antitrust laws requiring sellers to pay buyer’s agent commissions. While some objections claimed the settlements could affect cases in other courts, the judge overruled these concerns. This decision marks the second group of settlements in the case, following a previous $208 million settlement in May. The total value of settlements in these antitrust lawsuits now exceeds $1 billion, with more large settlements pending, including from the National Association of Realtors and HomeServices of America.

Florida housing market

Giulia Carbonaro of Newsweek reports on the Florida housing market, noting that it has experienced significant declines in both new listings and pending sales. Further, four of the five U.S. metropolitan areas with the most significant year-over-year drops in new listings are in Florida. Tampa saw a 32.8% decrease in new listings and a 29.5% drop in pending sales, while West Palm Beach, Fort Lauderdale, and Orlando also saw notable declines. Carbonaro notes that experts anticipate activity will pick up again after the election cycle.

Kyle Foster and Mark Harper of USA TODAY report specifically on the Florida condo market, which is slowing as sellers flood the market following new safety regulations, prices drop, and sales stall. Many condo buildings face significant maintenance challenges, with insufficient reserves to cover repairs, particularly after recent hurricanes. As a result, condo sales have dropped, with units remaining on the market 79% longer than single-family homes, highlighting a shift toward a buyer’s market.

Despite recent sales declines and rising inventory, Florida’s housing market is expected to remain stable over the next two years, according to Marco Santarelli of Norada. However, growth may slow due to higher interest rates. Home sales fell in September 2024, with single-family home sales down 12.3% and condo/townhouse sales down 20.7%, yet prices have held steady, showing slight increases for single-family homes and minor dips for condos.

Dana Anderson and Elijah de la Campa of Redfin report on property taxes in Florida, which have surged significantly since 2019, with Jacksonville, Tampa, and Miami experiencing some of the highest increases in the nation. Jacksonville’s property taxes have risen 59.6%, Tampa’s by 56.7%, and Miami’s by 48.1%, exacerbating the state’s housing affordability crisis. The pandemic-driven migration, skyrocketing home values, and increasing intensity of natural disasters have driven these tax hikes, as local governments raise taxes to fund climate-resiliency projects and support the growing demand for services. 

Source: Redfin (November 2024)

“Florida was alluring for remote workers during the pandemic because of its relatively affordable housing. Somewhat ironically, the state’s population boom has driven up home prices, and property taxes along with it…The cost of owning a home has gone from affordable to unaffordable for a lot of local Florida residents and out-of-towners. Home prices that are much higher than in pre-pandemic times and the disaster-driven surge in HOA and insurance costs are now pricing homebuyers out of the market. The increase in property taxes is the last straw for some prospective buyers. Homebuyers have realized they may save money by paying no income tax, but their property tax bill will increase.”