Marketplace - Will homebuyers spring at lower rates?

Episode Date: March 14, 2025

Mortgage rates have fallen recently to 6.6% for a 30-year fixed. But will it be enough to bring prospective homebuyers off the sidelines? Not according to one survey, which found some buyers are holding out for rates below 5%. Also in this episode: The Trump administration cut USDA programs that allowed schools and food banks to buy fresh, local food. And the U.S. wants Chinese consumers to spend more, but that won’t be easy.

It's only been five days in this economy, right? Because it sure feels like longer. From American public media, this is Marketplace. In Los Angeles, I'm Kyle Rizdall. It is Friday, today the 14th of March. Good as always to have you along, everybody. In Los Angeles, I'm Kai Rizdall. It is Friday, today the 14th of March. Good as always to have you along, everybody. I think it's fair to say the economic weeks are all starting to run together.

Can't really tell one from to other, but by golly, we are going to try. David Gerrard at Bloomberg, Anna Swanson is at the New York Times. Hey, you two. Hey, Kai. Hey, Kai. David, remind us where you are. I am in Charlevoix, Quebec, which is where the G7 foreign ministers were meeting this week.

So I'm about two hours north of Quebec City on the St. Lawrence Seaway. Give us the global economic vibe, would you, vis-a-vis these United States? Total stupefaction at what's happening here, mixed with outrage and bewilderment. Tariffs and trade policy were not on the official agenda for this meeting. A lot of focus on Russia, Ukraine, the Middle East, but this was the backdrop.

And everyone was just kind of looking at their feet, wondering how the geopolitical terrain had shifted and changed so much. And also looking at the United States, this longstanding ally of all of these countries, obviously a member of this multilateral alliance, and just wondering what's caused this, why is it happening, and what's going to happen next? How much is this going to continue ratcheting up? Yeah, I laughed when you said stupefaction because that's really the only word I can think of.

Honest wants, and the question is, of course, with that as the backdrop, President Trump is playing a global game of chicken with the American economy as sort of the all-in stakes. And I guess my question to you is, he keeps saying, I'm not going to change my mind, no exclusions, no nothing. And the question is, really? Yeah, yeah. Well, yeah, I mean, he is certainly full steam ahead on his tariff threats. For now, he said that a lot more are on the way to in April. He's implying that really big global tariffs will go into effect. But he said that exemptions undercut the power of his tariffs and he's vowed not to do that this time. But honestly, I think it's hard for the president to resist the deal-making impulse. It's hard for him to resist trying to use tariffs

as leverage. And it seems like he sees almost everything as a source of leverage in negotiations. He has a very transactional view of the world. So you've gotten into these situations where he is putting on very aggressive tariffs, but in some cases, he's rolling them back, moving forward with them, and it's created just this very uncertain situation for businesses and for investors.

David, to the stock market now, and of course, the stock market is not the economy. They are, however, very close cousins. It does seem to me, and look, the president's people all say, no, no, no, he's not watching the stock markets, which honestly, I kind of don't believe. Let me rephrase that. I don't believe it at all. Forget the kind of.

They are mutually exclusive, right? Keeping the markets calm and keeping these tariffs on or whatever he's doing, they are mutually exclusive. Yeah, I think what you're seeing in the stock market, and it's been a wild ride this week, is just increasing unease with what Ana was just describing, that is the president's affection for putting tariffs on and taking them off and threatening more of them. And I think you're seeing just kind of a general unease among people who are in the stock market, who are paying attention to the economy, just sort of wondering where all of this is headed. So you're right to issue your usual caveat about the stock market

not being the economy, but I think that it's telling us that there is this sense that things aren't happening the way that people want them to happen and can pull back even more. We're hearing from big companies, from big box retailers, from grocers that it doesn't take long for these tariffs to have real world effects and for companies to worry about getting access to certain products, getting access to materials, worry about how much they're going to cost and how that's going to be transmitted to consumers. So all of it's happening. And I think the stock market is a prism through which we can see the effect that's having not just on the economy, but on just regular folks who are kind of reckoning

with what's happening here. So without extending the metaphor too far here, Ana, we're in a trade war. We have become the aggressors in this trade war. Nobody wins a trade war, but I guess my question to you is, what does losing a trade war look like? Well, there may not be any winners, but there are definitely losers in some countries lose more than others. So I think that's the bet that the president is making, that other countries are more reliant on the American market than we are on them. That's certainly true in the case of countries like Canada and Mexico. Unfortunately, they're just kind of saddled to the US market and just very dependent for exports to the US market and just very dependent for

exports to the United States. It's a little bit less true when you're thinking about countries that are more distant and big like the European Union and China. And so you have seen some countries that are willing to try to call the president's bluff by retaliating. China, Europe, you've also seen Canada, you know, kind of standing up for itself, right, maybe be more because of a domestic political situation. And so countries are taking different routes. Some are, you know, holding their firepower for now, others are retaliating. And you are getting into these tit-for-tat cycles of tariffs

that are really quickly escalating and those costs are adding up for companies that depend on trade. David, on those costs adding up, and let me get back to the stock market real quick here. Obviously just the disclaimer again, it's not the economy, but damages being done to the real economy that is now manifesting in the markets. Do you agree or disagree? I agree with that. I think you and I talk a lot about all different kinds of data, but I think the so-called soft

data, the sentiment data is really crucial here. We got some of that today from the University of Michigan. We're seeing consumers who are worried about their prospects for saving and for the economy more generally. I think what's really concerning beyond that is their sense of where inflation is headed, their sense that inflation is going to stay elevated, go higher. And I mean, that's a really damning indicator. And one I think obviously the Fed is going to take notice of is they kind of plot their next steps here. Yeah, just having real ramifications. And I think it's leading to more and more damage the longer this goes

on. And we hear talk of an adjustment period or a period of transition. That sounds like something that's quick and immediate. But I think what we're beginning to see here kind of in contours is it might not be that fast. It might be something more prolonged that could have more lasting effect. Anna, on that consumer confidence number out of the University of Michigan, interesting to me that the concern, one of the concerns expressed was concern about the labor market. I think the greatest

concern about the labor market like since the Great Recession. Yeah. And it still seems like the labor market is fundamentally healthy, but hiring has slowed. I think people think that growth could cool somewhat this year. There's also rising sort of predictions of the chance of a recession. So as we're saying, some of this is vibes, but vibes translate into real economic activity from consumers and from businesses. And so that matters and that could really determine some of the course of what we see over the coming months here. Vibes do matter.

Anna Swanson at The New York Times, David Gerrard at Bloomberg North of the border this week. Thanks you two. Thank you. Have a nice weekend. Wall Street on this Friday, up for the session, down for the week. Details numbers when we get there. As we head into spring, traditionally the most active season for home buying and selling, there is some heartening news.

Mortgage rates have fallen seven of the past eight weeks, down from just over 7% in mid-January, and that itself was down from almost 8% in late 2023. While not wanting to look a gift horse in the mouth and acknowledging that the current 30-year fixed rate of 6.6-ish percent is still painful, what is going on? We asked Marketplace's Mitchell Hartman to find out. So how is this spring home buying season going to go? Depends who you ask. When we ask people to describe their local housing market, doomed, inflated, crazy. That's Erika Giovannetti at US News and World Report,

which just released its Spring Homebuyer Survey. What's most striking, she says. The disconnect between where home buyers want rates to be and where rates actually are. It is just simply unaffordable to buy at current rates and home prices for many, many people. Though mortgage rates have edged down lately, says Zillow economist Orfeh Divunghi, and... Buyers have more options than they had a year ago. It's the most homes for sale of any February

since 2020. But remember, all real estate is local. Israel Hill is a broker in Portland, Oregon. Eric Giovanetti What we're seeing here, a frenzy of activity, very limited inventory, and multiple offers. Those that can't afford it are just saying, okay, you know what, I'm gonna make my move. I've been waiting for too long. Adam Stoltenberg But at the national level, the US News Survey finds four out of five buyers won't act until rates fall further. And says

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Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, Erika Giovannetti, rates will move in. Adam Chapnick, Ph.D., Ph.D., Ph.D. Guy Ciccola at Inside Mortgage Finance says right now mortgage rates are falling for a not very favorable reason. Guy Ciccola, Ph.D., Ph.D., Ph.D.

The stock market tanking as a result of the Trump administration's economic moves, particularly the tariffs. Adam Chapnick, Ph.D., Ph.D. He says any improvement in the economic outlook could push mortgage rates up again. His best guess is that rates settle close to 6% later this year. And as for holding out for the rates we saw a few years ago... Three or four percent mortgages? I don't think we're going to see that...

In the foreseeable future. I'm Mitchell Hartman for Marketplace. Schools and food banks around the country have been able to get tons of fresh produce and fresh meat from small local farms the past couple of years thanks to federal funding. But that money is coming to an end. The Department of Agriculture is canceling the two programs that paid for all that fresh local food, totaling more than a billion dollars worth of contracts for small farmers and ranchers and fishermen. Marketplace is Samantha Fields.

How's that one? Running a small family farm that turns a profit isn't easy. Emma Johnson's family has owned one for decades. I'm actually a fourth generation farmer. She and her husband run Buffalo Ridge Orchard with her parents on 80 acres in central city Iowa. We grow a lot of apples and we do grow some pears and then we grow from A to Z all of the different vegetables. Recently, they've been selling a lot of their produce to local schools and food banks through these USDA programs, about $65,000 worth. And this season, we are anticipating for those numbers to grow because the budget had grown. Instead, there's suddenly no budget for those programs, which means Johnson and her family are scrambling to figure out where else they can sell all those fruits and vegetables. Their contracts with schools and food

banks were going to be about 25% of their income this year. That's jobs, that's staff, that's our ability to even have a profit for the season. In Pennsylvania, E. Nicole Taylor says she's also scrambling to figure out how the Great Valley School District, where she's a food service supervisor, is going to fill the sudden hole in its budget. They've been using federal funding to buy local meat, milk, and produce for school lunches. The meals that our students receive today are not the meals that I received when I was growing up. Now, she says they may have to shift their budget around, cut somewhere, so they can afford some fresh local food, but.

There's some things that we're just not gonna be able to offer our students. Families that rely on food banks will see a difference too. Paco Velez runs Feeding South Florida, and he says buying locally has really changed what they can offer. You name it, it's grown here in Florida. We get asparagus, we get broccoli,

we get strawberries, we get blueberries. Plus eggs, salmon, and yogurt. Without this USDA funding, the food bank will have less variety and just less food, period. As the government starts pulling out, then it leaves a huge gap. So the first thing that came to mind is how are we going to do this? How are we going to ensure that as an organization we're doing everything that we can? To fill that gap, I'm Samantha Fields for Marketplace. Coming up. The eggs.

They went up, up, up, up, up. Egg prices have bakeries in a... Alright, fine, I'll go there. Scramble. But first, let's do the numbers. Dow Industrial is up 674. Today 1 2 thirds percent finished at 41,488. The NASDAQ added 451 points, 2.6 percent.

Closed at 17,754. The S&P 500 gained 117 points 2 and a 10th percent 56 and 38 there for the five days gone by we should change the music here I think the Dow fell 3 and a 10 percent the Nasdaq subtracted 2 and 4 tenths percent the S&P 500 down 2 and a quarter percent PepsiCo bubbled up two tenths percent today after Bloomberg reported it's in advanced stocks to buy the prebiotic soda brand Poppy for a billion and a half dollars. We just talked about that the other day, Poppy and the prebiotics,

gut pops I think they're called. Rob and Coca-Cola fizzed up about a 1.1%. Cosmetic retailer Ulta Beauty popped 13.2% today after reporting fourth quarter sales and profit came in above Wall Street estimates thanks to strong holiday season demand bond prices fell when that happens the yield goes up the yield on the Tenure Treasury note four point three one percent and the week and you're listening to marketplace

this is marketplace I'm Kyle Rizdal. The tariff, retaliatory tariff life cycle is alive and well, as you know, and it is thriving in the U.S.-China bilateral trade relationship. One extremely relevant factor, though, is that we buy way more stuff from China than China buys from us. The trade deficit last year was nearly $300 billion. President Trump has, of course, urged Chinese consumers to buy American, which would in turn boost U.S. exports. But getting those Chinese consumers to spend more is not easy.

Marketplace's Jennifer Pak has more from Shanghai. At a Starbucks in Shanghai, Kathy Guo sips an iced lemon tea. Coming from the Chinese countryside, she says, she couldn't afford to buy anything American until she got to college. It was a KFC meal. I had a part-time job then. I remember how good the KFC sundae tasted, but then immediately regretted it

because I worked hours just to afford that meal. Her consumption upgraded after she entered the workforce in 2010, when trade between the U.S. and China was booming. I used to buy iPhones. I've had the iPhone 4, 5, 6 and 7. When she became a mom, she pivoted to spend on her child, Dutch milk powder, higher quality meat at Sam's Club and even a trip to Shanghai Disneyland. But then Guo lost her office job in Shanghai.

I said to my daughter, Mommy doesn't have a job right now. Can we spend less? If we go to the movie theater, how about we don't have a big meal afterwards and just eat noodles? High unemployment, trade tensions, and the property crisis have made people spend more cautiously. Consumption last year contributed 45% to China's economic growth, down from 58% just before the pandemic. Officials have offered subsidies for people to upgrade anything from cars and fridges to cell phones. But, says Calvin Lam, senior China economist with Pantheon Macroeconomics in London. What they've done so far in terms of boosting domestic demand is always seen as underwhelming by market participants.

He says investors shouldn't be surprised by this if they've paid attention to statements from China's leader, Xi Jinping. He prioritizes China's development by putting all the resources in, narrowing the technology gap between China and the U.S. Chinese officials have long preferred to help companies instead of handing out cash to consumers, says the China director of Eurasia Group, Wang Tan. They believe that companies can provide long-term steady stream of income and if you subsidize

consumers they tend to become lazy. They enjoy using this phrase, we're not going to raise lazy Chinese. When the US imposed new rounds of tariffs on Chinese exports this month, China's premier Li Qiang announced in a government report that domestic demand should be a key driver of growth. We will vigorously boost consumption and investment returns and stimulate domestic demand across the board. He announced more subsidies like rebates to encourage people to buy more. But boosting consumption won't be easy. Chinese consumers tend to save a lot, over 30 percent of their disposable income

by some estimates, for education, housing, retirement and health care. Again, economist Kelvin Lam. Basically, China has got very limited social safety nets. As for newly out of work Cathy Guo, she and her family now rely solely on her husband's salary. My husband used to save about 70% of his salary. But now that I don't have a job, we spend almost all of it. On things like their mortgage, car loan and children's education.

But not so much on buying stuff, whether Chinese or American. In Shanghai, I'm Jennifer Pak for Marketplace. The good news about egg inflation is that the price of a dozen is down about 15% over the past couple of weeks. The bad news about egg inflation is that even with that decline, the price of a dozen is still up about 170% from a year ago, data courtesy of the U.S. Department of Agriculture. So restaurants and bakeries are adapting their recipes and raising their prices. This next story is about a small business where eggs are their bread and butter, if I can mix my metaphors. It's a one-of-a-kind cafe in a city famous for

its restaurant scene, and it's a place that might soon be extinct, not entirely though, because of the price of eggs. Mary Beth Kirschner takes us there. At Cafe Jacqueline in San Francisco the menu is all soufflés. Entrees and desserts. We're gonna get Gruyere. And what's the dessert? An 88 year old chef Jacqueline Margulies whips up every single one. What does souffle mean in French? Suffle is blow, it's something that puffs up. Which is what glossy egg whites do, like magic, elevating everyday eggs into a fragile, towering masterpiece.

Jacqueline opened her café 45 years ago in a former shoe repair shop in San Francisco's storied North Beach neighborhood, a hub of Italian restaurants and culture. Everybody said, huh, Italian neighborhood? You're going to put souffle? What is a souffle? Over four decades later, she's still making at least 25 exquisite souffles a night for her nine-table restaurant. A hush falls over the table.

Matt Weimer is the only waiter here. He's been at Café Jacqueline for 30 years. Matt says he loves these moments when the conversation just stops. It's such a beautiful thing. They're in mid-sentence, this thing sits on the table, and they just go up, and I love that. Wow. Now, you like me to serve, or you like to dive right in? This thing sits on the table and they just... And I love that.

Now you like me to serve or you like to dive right in? The menu, the decor, nothing's changed. There's no website. You have to leave a phone message on their answering machine to make a reservation. This is one of my all-time favorite restaurants ever. In San Francisco, a tech hub with 28 Michelin-starred restaurants, Cafe Jacqueline is an anomaly. It's as low-key and low-tech as it gets.

You have no website. Have you ever looked online to see? No. So look, they list the hours, and then there are pictures of soufflés. Look at these, Jacqueline. Wow. It's very nice.

Jacqueline and Matt are busy with other priorities. It's almost 5.30. It's time to rock and roll. Jacqueline works in a galley-sized kitchen. She's whisking, beading, folding for five hours a night without a break. She's tiny, 4 foot 11, and her oven is over six feet tall. So when she opens the oven door for each souffle,

it looks a bit like she's lifting a carry-on into the overhead of an airplane. And when each delicate souffle is ready, it's all a wonder, especially because Jacqueline fell and broke her shoulder just a few months ago. But within a couple weeks, the doctor said, Oh, mon dieu, she's healing so well. Another week or so, you can go back to work. I said, that's very nice. And now her latest obstacle, the eggs.

They went up, up, up, up, up. A case of eggs went from $75 a year ago to $230 now. That's over a 200% increase. Some loyal customers, like Alex and Taggy Lee, started to fret. Somehow she manages to materialize her eggs. She has good jujus. Everyone else can go without their eggs.

Jacqueline needs the eggs. She raised prices a few months ago, five dollars more per souffle. So far not a single complaint. I will be devastated when this isn't an option anymore. When will Chef Jacqueline put down her whisk? I don't want to be falling into my eggs. I don't know when I will hang my apron.

It's part of you. Jacqueline Margulies turns 89 next month. I'm Mary Beth Kirschner for Marketplace. This final note on the way out today, we don't do a whole lot of precious metals on this show, but here's a quick update on the original safe haven. Gold topped $3,000 an ounce at one point today closed just shy. The shiny yellow metal is up 14% a year to date as, you know, things have been happening in this economy. Our theme music was composed by BJ Liederman. Marketplace's executive producer is Nancy Fargalli.

Donna Tam is the executive editor. Neal Scarborough is vice president and general manager. And I'm Kyle Rizdahl. Have yourselves a great weekend, everybody. We will see you again on Monday. All right? This is APM. Consumer confidence had its sharpest monthly decline since 2021, which means we're all

in our fields about money. And while uncertainty is the only constant these days, it's also a great reason to get serious about understanding personal finance. I'm Janelia Espinal, host of Financially Inclined, a podcast from Marketplace that makes learning about money simple. Learn about practical skills like negotiating job offers, dealing with money and friendship and love, entrepreneurship, and student loans. Get serious about your money and build a life you've always dreamed of. Listen to

Financially Inclined wherever you get your podcasts.