👋👋 Good morning real estate watchers! Today, we are going to talk about Bessent possible taking over the Fed, and how we might finally get that 0% interest Trump has always dreamed of. Great for homebuyers... and also Venezuelan-style inflation!

But first, here’s what we’ve been paying attention to this week…

1️⃣Housing Hunger Games: The U.S. housing market is shifting towards a buyer's advantage, with only 28.5% of homes selling above asking price—down from 53% in 2022—and buyers now enjoying negotiating power amid high mortgage rates and economic uncertainty. (Redfin)

2️⃣ Economic Speed Bumps: The US economy is currently experiencing four potential growth obstacles - higher oil prices, increased tariffs, student loan repayment resumption, and elevated long-term interest rates - but these economic headwinds are currently not severe enough to trigger a recession. (Apollo)

3️⃣ Cash? Nah, Bruh! Despite rising home prices and mortgage rates, investors are still actively purchasing properties, with 13% of homes bought by investors in 2024. However, all-cash sales have dropped to their lowest level since 2008, indicating a shift towards more mortgage-dependent investment strategies. (Realtor.com)

4️⃣ Flow-ing with Ambition: Billionaire Marc Andreessen is doubling down on Flow, Adam Neumann's real estate platform that aims to revolutionize rental housing through community-building, with the startup already owning over 3,000 apartments across Florida, Georgia, and Tennessee and valued at $2.5B. (Bisnow)

5️⃣ Hold, Please! The Fed held interest rates steady (again), citing inflation jitters, rising unemployment, and looming tariffs as reasons to stay in wait-and-see mode. Treasury yields and mortgage rates crept up on the news because "uncertainty" is now a monetary policy strategy. (Zillow)

TOP STORY

In the marble halls of Washington D.C., where acronyms wield more power than people, a new Game of Thrones is quietly unfolding, except this one comes with higher mortgage rates, lower Fed credibility, and, naturally, a healthy dose of Trumpian flair.

Meet the central characters: Jerome Powell, the embattled Fed Chair Trump once handpicked and now publicly eviscerates with all the subtlety of a WWE promo, and Scott Bessent, the smooth-talking Treasury Secretary suddenly tipped to replace him. Bessent calls his current post "the best job in Washington." Trump, meanwhile, might be sharpening a metaphorical guillotine.

“Mr. Too Late.” That’s Trump’s latest nickname for Powell, whom he blames for refusing to drop interest rates faster than a bored toddler throws Cheerios. “A numbskull,” Trump added (in case you missed the nuance). The President has all but accused Powell of sabotaging the economy by not playing along with his calls for “rocket fuel”—his words—for the economy via full percentage point rate cuts.

While Powell insists he will serve out his term until 2026 and continue to make “objective, non-political” decisions, rumors of his early replacement are gathering steam like a Reddit-fueled meme stock. Bloomberg reports Bessent is a frontrunner, while the White House, in a classic Washington two-step, denies any such plans are afoot.

So, what’s at stake in this Federal fracas? Oh, just the future of interest rates, inflation management, mortgage costs, and the entire U.S. housing market. Let’s break it down.

Mortgage rates have been sticky, hovering around the 7% range, despite inflation data softening in May. This matters because the Fed’s rate policies directly influence borrowing costs for homebuyers, developers, and investors. A shift toward a more Trump-aligned Fed chair like Bessent could signal a pivot toward aggressive rate cuts, even preemptive ones, which could, ironically, reignite inflation fears.

Moody’s chief economist Mark Zandi offered a sobering note: while May’s numbers look decent, this may just be “the calm before the inflation storm”. Lower rates may boost homebuying activity in the short run but could heat the economy too quickly, sending prices and asset bubbles back on the rise.

Trump’s campaign against Powell isn’t just personal, it’s institutional. His repeated calls to lower rates “to zero or less” (yes, negative rates) back in 2019 and now again in 2025 show his disdain for Fed independence. Even former officials like Kevin Warsh, another rumored candidate, walk the fine line between loyalty and credibility.

Goldman Sachs issued a cautionary note this year, warning that undermining central bank independence could lead to long-term economic instability. Translation: If the Fed becomes a political puppet, real estate markets might ride a sugar high, followed by a coma.

Scott Bessent is no stranger to the markets. A former Soros Fund Management executive, he knows the dance between policy and capital flows. His current role involves steering global trade reforms and tax policy, two levers that impact housing costs, supply chains, and foreign capital investment in U.S. property.

If Bessent takes the helm, expect monetary policy to bend more toward market stimulation, potentially easing credit, softening borrowing costs, and lighting a fire in commercial and residential real estate sectors. Think more liquidity, more speculation, and possibly more risk.

None of this is set in stone. Trump is known to love chaos almost as much as he loves coining new nicknames. One day, he threatens to fire Powell; the next, he calls him a “FOOL” but says he “likes him very much.”

If Powell stays, we likely continue the cautious, data-driven course. If Bessent steps in, buckle up. The housing market may enjoy a short-term rally, but at the cost of long-term stability.

In the end, this isn’t just a Fed soap opera. It’s a battle over the very mechanism that controls the levers of the U.S. economy. The outcome could influence everything from the yield curve to your next home appraisal.