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Editor’s Note: Tim just released his latest Premium-exclusive weekly video covering the good things that 2025 has in store for us real estate investors. Below is a brief preview. Upgrade to Premium to access the full video and transcript!
Overall Economic Context:
The U.S. economy remains robust, with no significant signs of a slowdown entering 2025, despite higher-than-historical interest rates.
The Federal Reserve’s easing efforts are expected to be cautious, with rates staying elevated for longer due to structural resilience in the economy.
The U.S. has diverged significantly from Europe and Japan, driven by unique fiscal and corporate dynamics.
Key Drivers of Economic Resilience:
Reduced Sensitivity to Interest Rate Hikes:
Unlike previous cycles, Fed rate hikes have had limited impact on household and corporate spending.
Over 95% of U.S. mortgages are fixed-rate, insulating households from rising interest costs. Effective mortgage rates remain at ~4% for most borrowers compared to current rates of ~7%.
Corporate borrowing is predominantly fixed-rate, reducing debt-servicing pressures even in a high-rate environment.
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