BlackRock to Fed: Cut Rates Now or Watch Housing Market Collapse

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News Flash

BlackRock's Plea: Cut Rates Now, Ask Questions Later

BlackRock's CIO Rick Rieder isn't mincing words about the Fed's approach to interest rates. He's pushing hard for pre-emptive rate cuts, arguing that current monetary policy keeps housing "structurally unaffordable".

Rieder's pitch is straightforward: two quarter-point cuts could unlock significant housing supply and prevent the sector from dragging down broader economic growth.

The numbers behind his argument are compelling. A 6% reduction in mortgage rates could boost affordability for an estimated 5.5 million households. That kind of relief would likely encourage both buyers and sellers to re-enter the market.

Here's the catch: Rieder's approach clashes with the Fed's preference for waiting until inflation clearly returns to target levels. He's essentially betting that housing market sensitivity to rates warrants breaking from traditional monetary policy playbook.

The core issue remains unchanged—current homeowners are locked into lower rates and reluctant to sell, while potential buyers can't afford to buy. It's a supply-demand puzzle that rate cuts could potentially solve.

Whether the Fed bites remains to be seen. But when the world's largest asset manager starts making noise about structural affordability problems, it's worth paying attention to where the conversation heads next.

Cash Kings: Investors Claim Record Share of Housing Market

Small investors just hit a milestone that should grab your attention: they snagged 27% of all U.S. home sales in Q1 2025. That's the highest share we've seen in at least five years.

The math is staggering. We're talking 265,000 homes purchased by investors in just three months. Scale that up, and 2024 saw roughly 1.2 million investor purchases—well above the 1.1 million annual average from 2020-2023.

What's driving this surge? High mortgage rates have essentially priced out traditional buyers, creating a vacuum that cash-heavy investors are happy to fill. While individual buyers struggle with 7%+ mortgage rates, investors can make cash offers or secure better financing terms.

The implications cut both ways. Sure, investor activity helps stabilize prices by absorbing inventory. But it also means fewer homes available for owner-occupancy, pushing more housing stock into the rental market.

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More You Should Know

• Mortgage Rate Holds Steady: The average 30-year fixed mortgage rate remained at 6.74% as of July 24, according to Freddie Mac’s latest survey, reinforcing expectations for continued elevated borrowing costs through late 2025. [Source]

• High Rates Dampen Refis: Despite rising home values, elevated 30-year conventional refinance rates near 6.89% and jumbo loan rates around 7.17% continue to subdue equity-tap volumes. [Source]

• Spring Home Sales Slump: The U.S. experienced its slowest spring home-selling season since 2012, with transaction volumes between March and June reaching a 13-year low, driven by increased inventory and buyer hesitation amidst economic uncertainties. [Source]

• Inventory Shifts Market to Buyers: Realtor.com's mid-year forecast indicates a 16.9% year-over-year increase in housing inventory, pushing the market towards buyers with projections of flat sales and a modest 2.5% annual price increase as listings outpace demand, slowly improving affordability. [Source]

• Sun Belt Rental Shift: Owners in Sun Belt cities, unable to sell homes at desired prices, are converting their properties into rentals, which is undercutting institutional single-family rental companies on rent prices. [Source]

• Apollo Faces Maturity Wall: Apollo Commercial Real Estate Finance (ARI) is at a critical juncture, needing to redeploy $1.5 billion in 2025 repayments as it navigates a $2.3 trillion U.S. commercial real estate loan maturity wall by 2026, exacerbated by the ongoing office refinancing crunch and rising credit spreads. [Source]

• Inflation Stalls Rate Cuts: Amid sticky inflation data, bond markets are pricing in less than 30% odds of a September rate cut, prompting economists to warn that a continued housing slowdown could weigh on GDP while the Federal Reserve remains on pause. [Source]

• First American Debuts Agent AI: First American Title has launched AgentNet Assist, a new generative AI tool that provides title agents with instant access to extensive underwriting knowledge, forms, and fraud alerts, aiming to accelerate closings and minimize title defects. [Source]

• Sellers Trim Asking Prices: Amidst a 12% increase in total housing supply and the slowest growth in U.S. median list prices in four months, sellers are increasingly reducing asking prices to adapt to a more buyer-friendly market. [Source]

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