After pausing its interest rate hike sprint in December, it’s expected the Fed will begin cutting interest rates in 2024. How will that affect your property taxes? What can you do about it?
The Fed Reverses Stance On Interest Rates
After rapidly raising interest rates, and fueling inflation and financial distress, the Fed seems to be reversing course.
Expectations are that the Fed may cut rates three times in 2024. Followed by more cuts through 2026.
Of course, interest rate cuts are attractive in an election year. Though it is also likely that this switch in policy has been triggered by mounting negative economic data which has not yet been publicly published in the media.
The Expected Effects Of Reducing Interest Rates
The general anticipation of lower rates is that it will bring down the costs of mortgages, car loans, and credit card and business debt.
This in turn ought to fuel the economy with more activity. Banks ought to be more eager to make loans. Home buyers and sellers should be more willing to take action. Businesses should be more confident and have more funds to grow.
The hope is that this would create a positive upward spiral across the economy.
Why It May Not Work
Sadly, even if the economy does turn around in mid 2024, it could be far too late for many small businesses and households.
Millions appear likely to have fallen too far behind on their housing related payments and other debts to catch up. A mess which may take them another 10 to 20 years to clean up, regardless of the broader economy.
At the same time, consumer prices are even higher than they were a year ago. AI and recent high rates are also likely to continue to fuel rising unemployment.
This will create an opportune time for investors to pick up distressed assets at deep discounts. Though home and business owners can count on their property taxes going up again this coming year.
This will either be blamed on additional funds being needed to handle distress and to provide more assistance, or on rising property prices and inflation. Or both.
Now is the time to challenge your property tax assessment and bill, and start from a new lower basis, before the bills increase.