According to Zillow Research reporting on the Federal Reserve's June meeting, the Committee kept interest rates where they are right now, but the conversation around rates is shifting. In their economic projections, nearly half of the officials indicated they're expecting to raise rates sometime before the end of next year. This is a meaningful change from what we've been hearing, because the focus has moved away from the possibility of cuts and back toward increases.
What's driving this shift? A couple of things are happening at once. First, oil prices have gone up recently, and that's pushed inflation back above four percent, which is higher than the Fed wants to see. At the same time, new employment data shows the job market is actually stronger than economists thought it was, which suggests the economy has more momentum than we realized.
Now, here's the interesting part for real estate specifically. Zillow's research shows that housing affordability has actually gotten a little bit better over the past year compared to where we were. Some of the conditions for buyers have eased up. But here's the catch, and this is important: those improvements are being canceled out by increases in everything else. The real problem underneath all of this is that we haven't built enough housing for years now, and that shortage isn't something any policy change can suddenly fix.
What I am seeing locally in the Bay Area and the East Bay is that while these national trends matter, our regional supply challenge is the main story. Yes, there might be rate moves ahead, and yes, we're watching inflation and employment closely. But the honest truth is that until we get more homes built in places like Fremont and across our region, we're still going to have that structural shortage holding back both buyers and sellers. The real estate market here is fundamentally shaped by how few homes we have available, not just by what the Fed does.
