Welcome to the Skeptical Investor Newsletter. A frank, hopefully insightful, dive into real estate and financial markets. From one real estate investor to another.

This week, we’re talkin’ are rents up or down? The data is mixed. + Interest rates (my favorite topic) and could the President declare a national housing emergency?

Let’s get into it.

Last week, on the back of much lower PPI producer/wholesale inflation numbers, we got CPI consumer price report. And it was no bueno.

Up .04% on the month, putting the annual inflation rate at 2.9% and 3.8% core (excludes volatile food and energy prices), both hotter than expected. Importantly: many prices were actually in line with expectations. But housing was way off.

The index for shelter rose 0.4% in August and “was the largest factor in the all items monthly increase (BLS).”

No Tariff Effect, Yet

And so far, there has been “no big alarming sign of tariff-induced inflation… in fact, goods prices increases are decelerating. core goods ex vehicles (which have been volatile) up 0.13% this month In Jun,e those goods prices were rising 0.55% (Eisen).”

It’s all service inflation, indicating a healthier-than-thought consumer.

Wells Fargo echoed this sentiment last week, saying, "In our own data, things are remarkably stable... Consumer credit is as good as it's been in the last six months. In fact, it's probably trending a touch better. Companies are in really great shape... Things actually feel VERY GOOD today (CNBC)."

Again, so far.

But, and I hate to have to say this, with all the problems over there at the Bureau of Labor Statistics, they have earned my Eye of Sauron-level skepticism. I just can’t trust the numbers they are spitting out, only to invert them opposite a few months later. Last week, they reported revised jobs numbers showing the U.S. economy added close to a million fewer jobs in 2024 and early 2025 than they previously reported.

Case in point: here are 4 headlines re: multifamily rent rates (Parsons).

From CoStar …

From RedFin (the outlier)…

From Yardi:

And finally, from Real Page:

With this chart.

Now, the trend seems to refute the BLS numbers and shows rents down. But regardless, we need better housing data!

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This wasn’t as reported on for some reason, but the Labor Department also reported a surprise increase in weekly unemployment filings to a seasonally adjusted 263,000, the highest since October 2021.

*One weird note: there was a spike of 15,000 from Texas in unemployment. That is a prime candidate for correction/revision next month.

But the bond market took notice, and bonds got bought up at a rapid rate, dipping the 10-yr Treasury yield briefly below 4%. It’s lowest since a flash in the pan moment in April, and before that October 2024.

The 10-year Treasury is now sitting at 4.034%, as I write today.

Mortgae rates are at 6.25%, down .33% in just the last 30 days. The spread between the two continues its compression, without any Fed cuts. As I spoke about last week.

So if the Fed is true to their word and “data dependent,” and the data is horrible, the Fed may even cut .5%, not just .25%. And the data would say they should have done it in June (remember, this decision is in 2 days)!

Here is what the bond market thinks:

Now, 3 cuts is a lot to ask for, but I now do think .5% lower rates this year is very possible.

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Now, we don’t have many details, but during an interview the other week, Treasury Secretary Scott Bessant, off camera, after an interview with the Washington Examiner said that the US “may declare a housing emergency.”

Wait, what?!

Now, details are thin at this point, but so far we know that a primary focus of the Treasury this year has been to get those pesky interest rates down. (cite my newsletter)

Off camera, the reporter asked Bessent a question on the housing [affordability] crisis, “What else can the president really do here?”

And the reporter is right, the President is limited in their power to affect interest rates (and really the bond market). But that hasn’t stopped him from trying. The President has been really pulling out all the stops to, let’s say, “encourage” the Federal Reserve to cut interest rates since even before he took Office. And as I have written about before, he's taking extra extraordinary measures in an attempt to incentivize Jerome Powell to cut rates and potentially remove a Fed Governor for alleged (and seemingly likely) multiple counts of mortgae fraud.

But Bessent responded promptly, with a bomb shell:

Bessent: “We may declare a National housing emergency.”

Reporter: “Oh wow, is there a timeline for that?”

Bessent: “This Fall.”

Oh wow indeed!

Bessent went on, again off camera, to talk about their push to lower mortgage rates, the tremendous inequality in both" the rich benefiting from high interest rates (aka their stock/bond accounts), but the poor/middle class get crushed with higher housing costs and credit card costs when rates are high.

The problem emerged out of the 2008 Great Financial Crisis where developers and banks didn’t build and fund enough housing, leading a lost 2 decades of limited housing supply coming on market, then following that with too much governement stimulus, spiking inflation and permanently high prices mixed with accelerated demand from the Fed’s zero interest rate policy in reaction to the COVID pandemic scare. Median mortgage payments are up 59% 2020-2023.

So what may an emergency declaration on housing bring?

Options could include:

Drawing from my time in Congress, I bet there is a weekly standing meeting in the Treasury and amongst a group of lawmakers meeting right now (with unlimited coffee available). Their mission: figure out what we can do re: housing. Fueling this, Congress likely sees this as a winning political issue come 2026 and 2028.

Stay Tuned.

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Ok, back to business.

It’s true. Interest rates affect everything, from car loans to medical debt to credit cards...They influence the cost of borrowing and the potential returns on savings. Most people in America live on debt, and every single one of them has been paying more every month over the last three years because the Fed has kept rates high.

Moreover. This year, when almost every other country was cutting its rates, we weren’t.

Why?

We thought the job market was robust. And there were fears of inflation from tariffs.

So far, neither was true. And over the last several months, we now realize those job numbers were bullshit. Now we have a problem. We watched as inflation came down and cheered that. But did not think that could have been a signal of economic weakness, because we thought the job market was secure. That’s what the data told us.

Thus, the Fed has been behind. They spent the first half of the year telling everyone they couldn't cut rates, but now it is obvious they should have been cutting rates in June. So this potential rate cut in 2 days should be an easy one.

They should cut the damn rates.

And then do it again twice more this year, and then again at least twice more at the beginning of the year / Spring.

I hope that the government now sees that we need to change the way we collect important economic data. This is why the Bureau of Labor Statistics really matters, as I’ve been talking about the last few weeks, why the head of that deserved to get fired, and why we need to fix that damn agency. At the same time, my hope is that this does not get political. We really don’t need that infused into our data. Let’s get it fixed. Let’s bring us into the 21st century.

On the costs of housing and potential housing emergency declaration, we need something done here, too.

Now, the Administration doesn’t likly want to wade in too high up their gaters into the business of states, counties, and municipal governments re: building and zoning. BUT they may during an emergency. Hell, if it is truly an emergency, they may do pretty much anything, for a time. Hell again, if the National Guard could build homes, they’d have them do that too….

hmmmm…. well wait a minute there… (kidding!).

But I do think everything is on the table. Politically, it would make sense to do this now, starting in the Fall, and continuing up to the 2026 midterm congressional midterm elections.

I hope they take some sort of action to incentivize development, while leaving the Fed and bond market to do their thing.

Just don’t get crazy, ok guys?

Until next time. Stay Curious. Stay Skeptical.

Herzliche Grüße,

-The Skeptical Investor

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