BiggerPockets Daily Powell Hints That the Fed is Changing It's Strategy—What's the New Focus?
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May 15, 2025 The Federal Reserve is rethinking its approach to inflation and employment, with Jerome Powell acknowledging past missteps. Homebuyers are now leaning towards America’s oldest housing stock, highlighting a significant trend due to the slowdown in new construction. This shift poses unique challenges and opportunities for investors, especially amid rising inflation. As property age impacts market strategies, renovation and adaptation become key considerations for navigating this evolving landscape.
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Fed Revises Inflation Strategy
- The Fed is reconsidering its inflation and employment framework, moving from the 2020 low-inflation model.
- Powell acknowledges the prior assumption of transitory inflation was mistaken, contributing to delayed rate hikes.
Fed Eyes Labor Market Focus
- The Fed may accept a 2-3% inflation range focusing more on labor market health.
- Stable/moderate inflation could be tolerable if wage growth keeps pace with it.
U.S. Housing Stock Aging
- The typical U.S. home bought in 2024 is now 36 years old, the oldest on record.
- This results from a historic slowdown in new construction and shrinking affordability gaps.