Brexit. United Kingdom’s majority vote to leave the European Union. This happened last week causing the stock market to react accordingly. On Friday, the Brexit vote sparked a tumble of 611 points, or 3.4%, for the Dow. The Nasdaq Composite Index and S&P 500 lost 4.1% and 3.6%, respectively. On Monday, all three benchmarks were in negative territory for the year, with the Nasdaq leading the losses, off 8.1% so far in 2016.
Before Brexit, all of us in the housing industry were speculating on the interest rates and what the next 6 months may bring us as far as rate heights. Well, Fed Chairwoman Janet Yellen said ahead of Thursday’s historic referendum in the U.K. that a Brexit was one of the risks facing the global economy that could justify a cautious approach to raising interest rates. According to the CME Fed Watch tool, there’s currently a 0% probability of a Fed rate increase in July and a 6% probability of a rate cut.
Sounds good to me! Especially with our Charleston market so active this summer. Buyers and sellers should celebrate this as we could see an increase for the demand of housing, and pushing prices up still further. Some experts say that we can see the Fed delay rate hikes for quite some time. Quite possibly through 2017.