Hello everyone and welcome to another episode of Selling Greenville your favorite real estate podcast here in Greenville South Carolina I'm your host as always Stan McCune Realtor right here in Greenville South Carolina you can find all of my contact information in the show notes if you need to reach out to me for any of your real estate needs just a reminder as always please like this like if you're on YouTube just look real quick at your phone and hit the little thumbs up button or if you're watching on a computer same thing it takes 1 second to do it if you haven't subscribed please subscribe if you can leave a rating or review or a review on whatever podcast app you are listening to this on please do that as well and thank you guys so much for listening again I really appreciate all of my listeners I've been doing this show now for nearly 6 years it's kind of hard to believe over 300 episodes it's crazy not very many shows make it this long but you guys you know I've got a lot of devoted listeners and you guys are the ones that I do this for and so thank you very much so we survived snow apocalypse first ice apocalypse we had a couple weekends ago a lot of ice some of the ice still hasn't even melted like in my driveway some of it still hasn't even melted it's not a big deal not really worried about it I prefer not to put salt down in my driveway cause I have a creek on my property and it just washes away into the creek really bad for the environment so I really try not to do that but the ice is fine but then we got snow we got at my house probably about 5ish inches of snow it's pretty much all melted by now but that came through over the weekend so we've had two straight weekends of winter weather in Greenville after earlier in January we had some days that were in the 70s so we've had pretty much all four seasons well maybe not summer but basically the equivalent of two to three seasons just in the month of January it's been it's been incredible and here we are now in February and I can't believe already the first month of the year is behind us if you are a realtor listening to this I have something to let you guys know about the Realtor Political Action Committee which I am very involved with I chaired that committee the past two years I am no longer chairing it but I'm still on the committee still very heavily involved we have a an event for basically major investors people that that are pledging to donate $1,000 or more towards our pack in this calendar year we have an event on February the 19th 4:30 to 6:30 at the City Club you have to RSVP for it and you don't have to it can be it's a free event where you can show up even if you're not sure that you want to pledge to be a major investor and so it's worthwhile there will be some orders some drinks highly highly recommend if you're a realtor that you go to that and if you're not a realtor unfortunately unless you're an affiliate member you cannot attend an event like that due to federal guidelines so anyway reach out to me again my contact info is in the show notes if you don't have it reach out to me if you're interested in that I'm gonna put my phone on silent here because I just felt my watch vibrate which means I don't have my phone on silent alright so all that housekeeping out of the way we need to talk about some current events now I always tell you guys when I talk about national events this is always through a Greenville lens this is gonna be a little bit more national than I typically prefer to go with this show but this is very important president Trump we we've been talking about the Federal Reserve for quite some time and the relationship with President Trump and I you know I've discussed extensively on the show about specifically how the Federal Reserve and Trump are having a bit of a war specifically Trump is having has had a war now for over a year with Federal Reserve Chair Jerome Powell and we've discussed this war extensively for good reason because the Federal Reserve has huge control over our economy and what they do ultimately with the fed funds rate often has direct implications for mortgage rates again we've talked about all this in the past so you can you can go back and listen just search for federal reserve in in the search bar of this show and you will find a a lot of episodes that I've done on this and you know of course with the Federal Reserve having a lot of control over where mortgage rates are that's important because in case you haven't been paying attention mortgage rates are everything in real estate right now something we've also talked about a lot on the show so for quite some time now President Trump has been gearing up for replacing Jerome Powell whose term as chair over the Federal Reserve ends this year and he's been talking extensively Trump has about how he's going to bring someone in as chair who will bring rates lower now for a long time people assumed it would be Kevin Hassett one of Trump's economic advisors but few weeks ago Trump said really just in an offhand comment it was kind of funny that he wanted to keep Hassett in his current role and even though Trump didn't directly address the Fed chair rumors in that comment the markets immediately responded not in a good way because the Assumption was has it was gonna bring down rates well once Trump said that it's not gonna be has it the other options that basically are there are other potential people that probably won't drop rates to the extent that Hasset would and so that sent a market response they didn't like that the 10 year yield went up mortgage rates went up and really all bond yields went up and so as what always happens mortgage rates are tied to the bond market and so when the 10 year yield went up mortgage rates also went up with them and now I I don't wanna oversimplify this bond yields have gone up for some other reasons recently and I it's not all because of the comment about Hasset but there was a very clear immediate market response I mean it was funny when you when you track it the timing of when Trump's comment made it out on the internet the exact timing that that the bond market responded so basically the bond market concluded that if it wasn't going to be Hasid who was expected to lower rates then it's going to be someone who won't lower rates as much and so bond traders having been banking on lower rates coming readjusted sold off bonds causing yields to go up OK that's basically what happened and as I already said mortgage rates shot up with them remember a few weeks ago we discussed how Trump said he would direct Fanny and Freddie Mac to by mortgage backed securities and that caused mortgage rates to go from the 6 twos all the way down to at 1 5.99 right that wasn't that long ago just a few weeks ago well the has it news shot mortgage rates right back up to the 6 twos after they had been you know spending a good bit of time in hovering right around 6.0 they were shot right back up to the 6 twos and I've even heard since then that some people thought maybe Trump knew the Hasset news wouldn't be taken the best way and so he made the Fanny and Freddy announcement when he did in order to blunt the effect of the fact that he was choosing someone other than Kevin Hassett I don't know that that seems maybe like a bit of a stretch but it's possible right we don't know what sort of advice the president is getting I do know that he seems a lot more impulsive than he is having talked to people that are a part of his administration it seems like he a lot of the things that he does is not calculated and I would I I think that there could be some truth to that but I don't think it's fully to the extent that that the media wants you want you to believe I think that there is a lot going on behind closed doors regardless people have been speculating on who Trump was going to pick since it wasn't going to be has it and then a few days ago it became clear that Kevin Warsh was the front runner now Warsh served on the Federal Reserve as a Fed governor from 2,006 to 2,011 so he already has experience in the Fed so we can look at what he did and not only was he a Fed governor which is good right from the standpoint of us having a track record to look at but he but if you were paying attention there it was from 2,006 to 2,011 that was right smack in the prior to the global financial crisis and during it so he has a track record during a very interesting time now the thing that he is most known for is that during that global financial crisis when inflation was super low it was inflation was about a third of what it is currently I mean it was minuscule and unemployment was super high over double what it currently is has sorry Warsh famously said that he wanted to increase rates to make sure inflation didn't take off because he wasn't concerned about unemployment was at 9% at the time inflation was at point 0.8% okay so again unemployment super high right it's in the low 40s right now inflation super low right it was back then well unemployment back then 9% now it's in the fours inflation right now probably like two and a half percent something like that maybe a little bit higher than that closer to 3% and it was at point eight % okay and he was saying that he was more concerned about inflation than unemployment which is absolutely asinine that's an awful thing to have on your track record as someone sitting on the Federal Reserve during the worst recession of a generation of multiple generations to be honest and his concerns ended up being completely ill founded inflation did not go up during the global financial crisis unemployment did continue to go up during the global financial crisis and so he was entirely wrong on both points during one of the biggest economic crises in US history so that's not great and in general he has been considered a hawkish Fed governor okay someone who is hawkish is someone that wants higher rates again that's what he wanted during the global financial crisis when that would have been devastating would have been devastating to the economy to add high rates on top of all the other awful things that were going on so some of the some of this hawkish wants a higher rates versus if you ever hear the term dovish with regard to the Federal Reserve as someone who is dovish is someone who believes in lowering rates OK I'm oversimplifying things this is a podcast right heavy orality if you know what that word means in this podcast but what I'm saying is correct it's just simplifying it so very interesting selection by President Trump that wouldn't have been who I would have selected I would have selected Fed Governor Waller if it had been me to accomplish what the president wanted to accomplish but perhaps he felt like he has more direct say over wash perhaps maybe feels like I don't know I we don't exactly know what all was going into the president's thinking and as a result there's been a lot of reactions to this alright so from the standpoint of Warsh being impartial and someone who would do what is best for the economy rather than what's best for the president most think Warsh would be pretty independent which is good right we've talked about this before we want the Federal Reserve to generally speaking be independent we don't want them to change monetary policy simply because the president wants them to they need to be assessing the economy for what the economy is and making the best decision for our country independent of the president because presidents are elected officials every four years and they might want the to basically juice the economy in an unhealthy way we don't want that to happen however there is some concern that Warsh has become more dovish in what he has said the past year right so he's traditionally been considered a hawkish Federal Reserve member a hawkish economist suddenly he's pivoted to being more dovish the past year well what has happened the past year well one thing we know is that President Trump came into office so is Warsh actually independent or has he been changing his tune just because he wanted to be the Fed chair this is a concern that some other people have and there's also some concern that because Warsh has flip flopped recently as his tone has become more dovish that his colleagues on the Federal Reserve might not respect him and he may struggle to garner votes you you've got to remember here that the Federal Reserve is more than just one person the Fed chair doesn't decide rates or any of these things unilaterally there are 12 voting members on the committee who decide what should happen to rates the Fed chair's job is to herd the voting cats in the right direction and if they don't respect him right if they think he's flip flopping he doesn't stand for anything he's just doing what the president wants will he be able to hurt those cats I don't know I seriously I have some serious questions and so do many other experts because these people that serve on the Federal Reserve they're stubborn and prideful and it's hard to get consensus among them in the way that Chair Powell has done the past what 12 years it's really rare to get that sort of consensus and as far as markets are concerned this is maybe the most interesting thing there really hasn't been a large response right you had the response after Hassett was ruled out where the bond market basically had was like oh crap we're not gonna have Hasset rates might not go as low as we expected and so then the bond market immediately priced in someone who's going to potentially increase rates or not in or maybe not increase rates but not lower them at the rate that has it may have and so when it was it came out when Trump announced on Truth Social that Warsh was going to be the new Fed chair the markets had already priced that in so it treasure yields mortgage rates really didn't go up at all really nothing happened and that's good right where I'm thankful that there wasn't a huge swing in in that that the markets were kind of like OK this this makes sense but this could have a huge impact later this year right because most agree that more rate cuts need to happen at some point Will Warsh want that and will the committee agree to do it if he pushes for it again more questions than answers when it when it comes to what Warsh actually stands for now and whether he'll be able to get this committee behind him with wherever he lands on all of this additionally will a bond market agree with the with the Federal Reserve if rates get cut right so Warsh you know if we want mortgage rates to go down we need several things to happen some of these things have already happened which we've talked about in the past but we need the bond market the and Treasury yields specifically we need Treasury yields to come down right we've already talked about that but what often times Treasury yields follow what the Federal Reserve is doing but there has been a divergence recently the past few rate cuts that the Federal Reserve has had has caused Treasury yields actually to go up and there's a variety of reasons for that but the long story short is the bond market has to agree with the Federal Reserve and if they don't agree so let's say for instance the Federal Reserve cuts rates and bond traders think they're going way too aggressive they're trying to juice the economy they're going to send inflation skyrocketing then they're going to sell off their bonds and t bills and the end result is would be in that situation that they disagree with the Fed and mortgage rates would end up going up in that sort of environment and so and we've talked about this quite a bit if that were to happen then we could see a situation with a 30 year fixed rate mortgage and adjustable rate mortgages end up having a really big gap between them because ARMs adjustable rate mortgages are directly tied to the Fed funds rate whereas the 30 year fixed rate mortgage is directly tied to or indirectly tied to Treasury yields okay are you following I hope you guys are following all of that in fact one of my bold predictions was related to the spread between the 30 year fixed rate mortgage and the adjustable rate mortgage let me see what that spread looks like today actually I'm gonna pull this up real quick on my computer so as of on the as of bank rate what bank rate is saying is that the 30 year fixed rate on Bankrate 6.16% the five year arm 5.44% so that's a decent gap not a huge gap we'll continue to monitor that now another thing we need to to talk about here is that there could be some drama here still with regard to the Federal Reserve beyond what I've already said because technically Chair Powell could stay on the Federal Reserve as a voting member even though he will no longer be chair because he has been in a bit of an open war with President Trump lately some speculate he may stay on just to spite Trump would not surprise me that would be highly highly irregular but it would not surprise me because if you remember he made a scathing statement about the president recently and he's being sued by the department of justice and all sorts of stuff so nothing would surprise me at this point if he did stay on board he could seriously undermine Kevin Warsh and I suspect he would if he felt like Warsh was influenced directly by Trump and remember the current voting members on the Fed really respect Jerome Powell and they could very easily form a coup against Warsh if they didn't like the direction Warsh wanted to go in so this is all there's a lot of a lot of moving parts here and a lot of stuff that could go right or wrong and it all has major implications for mortgage rates and for the housing market specifically here in Greenville right because as I've said in a recent episode we need mortgage rates really around 5% in our market to see the market return back to something that resembles normal for Greenville I think even going down to five and a/2 percent would make a huge difference but right now this is all in jeopardy because of all of the chaos at the Federal Reserve and chaos in the bond market this chaos started with the tariffs and it's simply just continued it hasn't stopped now the tariff talk has calmed down but we're still hearing some of it it's just not as crazy as before so it's not really impacting the market as much but it had a huge impact last year so I think we can expect the end result of all of this really unfortunately to be higher rates for the 30 year fixed rate mortgage this year we may not see it go into the fives again unless the economy really starts to show signs of breaking right that's what causes Treasury yields to come down usually when unemployment starts to go up or you know or other signs of economic weakening happen then usually people try to go to safe assets and usually Treasury bonds are considered a a safe very safe asset and so when they buy Treasury bonds that brings the Treasury yield down and then usually mortgage rates come down as well so in the absence of that happening the economy kind of going in the tank like more so than it currently is I think people just need to be prepared that we might just be stuck in this low 6% mortgage rate environment for most if not all of 2026 now we do have elections later this year right it's a midterm year we don't know what impact that will have I have no idea what impact that will have that can go a whole lot of different directions and so we're going to track all of this I'm going to track all of it for you guys I'm gonna be telling you guys how it will impact the Greenville real estate market I will tell you this the past two weeks and Greenville have been slow because of all these storms right when we get ice when we get snow it shuts the city down shuts the county down for several days so now we've had two straight weekends that have been completely shut down as a result of winter weather which is which is pretty rare and so who knows what that will what implications that will have but it's been an odd start to the year we'll just say that a very odd start to the year so far but it's also been kind of nice to get a little bit of time off as we've had this winter weather so I'm not gonna complain about it it's easy as a realtor to complain when you're busy when you're super busy and to complain when you're super slow choosing not to do that I'm simply going to enjoy the business I'm gonna enjoy the slowness I'm gonna enjoy whatever comes my way I'm gonna enjoy high rates I'm gonna enjoy low rates I'm gonna enjoy chair power I'm gonna enjoy chair wash we're gonna enjoy all the things so thank you guys so much for listening that's all for today this episode please like rate review subscribe find my contact info in the show notes if you need a realtor in the Greenville area we will talk to you guys again next time!