According to Ben Casselman with the New York Times, “The Federal Reserve is hoping that its latest interest rate cut (October 30 2019) will help keep the economy at cruising altitude. But, don’t expect (this latest rate cut) to provide much of a lift to the housing market.”

Casselman believes that housing, in the grand scheme of the US economy, is not the engine it used be. Why? Housing is a smaller part of the economy than it was prior to the financial crisis; a smaller share of Americans are homeowners; and, with interest rates, already at near historical lows, it’s unclear whether or not this latest rate cut will do much of anything.

Obviously, interest rates do matter to homebuyers. Just take a look at what happened when the Feds lowered rates the first two times most recently…those cuts helped stabilized the market, those rates gave a jolt to the refinancing boon that has put billions into the recent economy, and those cuts helped the construction sector add to the GDP in Q3 2019 rather than contract from it as it had during the six prior months, according to the US Commerce Department.

New Free Webinar Shows You The 12 Secrets Of Real Millionaire Agents. Stop Struggling. You Can FINALLY Laugh At Your Money Worries – If You Follow This Simple Plan. Learn How To Generate 100’s of Motivated Leads Without Coming Off As A Pushy Salesperson and Losing Your Soul. Learn Now How To Become One of the 1000s of Agents Making HUGE Money Who Never Thought They Could.

YES, I Want To Attend The FREE Webinar! <——Click To Register

P.S. Free Webinar, Limited Space. Less Than 300 Spots Still Available.

However, there is more to home buying than just interest rates. Perhaps, according to the Urban Institute, lending requirements may have swung too far towards cautiousness after the housing crisis. Perhaps, according to Glenn Kelman, CEO of Redfin, the combination of low rates and tight lending standards is exacerbating economic divides. “Right now, money’s cheap, but you have to have a good credit score to be able to access it. (This combination) has been a bonanza for one group of people, the people who have always been able to get credit.”

And don’t forget that home prices continue to rise faster than wages in most parts of the country. Many cities, especially coastal cities, are in the midst of full-blown affordability crises. And at median listing prices at $500,000 and starter prices at $300,000, interest rate dips do not make a difference. Susan W. Wachter, a professor of real estate at the University of Pennsylvania, said, “This interest rate decline will not do it…it will not turn these potential owners into buyers…rate cuts are not effectively overcoming …affordability barriers.”

Matt Speakman, an economist with Zillow, agrees. “The few entry-level homes that are on the market are getting snapped up so quickly (by investors) that it perpetuates increasing home values.”

Mike Fratantoni, chief economist with the Mortgage Bankers Association, reminds us that mortgage rates are tied to long-term rates. Those long-term rates particularly reflect market expectations about the direction of the economy and those rates rise when investors are more optimistic. “So,” Fratantoni told Casselman, “if the Fed’s policy achieves its broader aim (of quieting imminent recession fears), I expect rates to rise gradually into 2020 and beyond.”

Also read: Podcast: Tim and Julie Answer Listener Questions, NAR’s Q3 2019 Homeownership Opportunities & Market Experience Survey, Rampant Uequity in Senior Housing Worsening