{"id":188467,"date":"2026-07-02T10:35:22","date_gmt":"2026-07-02T16:35:22","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=188467"},"modified":"2026-07-02T10:35:26","modified_gmt":"2026-07-02T16:35:26","slug":"new-fed-chair-same-inflation-fight-what-higher-for-longer-really-means-for-small-landlords","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/new-fed-chair-same-inflation-fight-what-higher-for-longer-really-means-for-small-landlords","title":{"rendered":"New Fed Chair, Same Inflation Fight: What \u201cHigher for Longer\u201d Really Means for Small Landlords"},"content":{"rendered":"

Real estate investors hoping new Federal Reserve chair Kevin Warsh would wave a magic wand and cut interest rates have been in for a rude awakening.<\/span><\/p>\n

With the Iran war still not concluded and inflation high, Warsh’s<\/span> demands for rate cuts<\/span><\/a> while his predecessor, Jerome Powell, was in office have come head-to-head with reality. <\/span>He <\/span>simply<\/span> cannot do it in the current economic environment.<\/span> In fact, Warsh has made a 180-degree turn from his previous proclamations that cast him in a favorable light with the president.<\/span><\/p>\n

\u201cPersistently high prices are a burden for the American people, but the recent past need not be prologue,\u201d<\/span> Warsh told reporters<\/span><\/a> as quoted by MarketWatch. He later added, \u201cThis committee will deliver price stability.\u201d He could have been reading quotes from his predecessor.<\/span><\/p>\n

Though Warsh chose to keep rates steady at the most recent Fed meeting, there was also talk of a<\/span> rate hike at the next meeting<\/span><\/a>\u2014the exact opposite of what many real estate investors were hoping for.<\/span><\/p>\n

Rate Malaise Meets a Cooling Market<\/span><\/h2>\n

For small landlords looking to get loans to buy more properties, the interest rate malaise is the last thing they want to hear. Most media outlets, including <\/span>Homes.com<\/span><\/a> and <\/span>MarketWatch<\/span><\/a>, predict ongoing pain for potential property buyers.<\/span><\/p>\n

\u201cWe\u2019re in a new era, and it\u2019s going to take a while for markets to figure out exactly how to react,\u201d Chen Zhao, head of economics research at real estate platform Redfin, told MarketWatch. \u201cBut one thing is clear: The committee as a whole is taking inflation very seriously, which means mortgage rates are unlikely to retreat much in the near future.\u201d<\/span><\/p>\n

However, the one bright spot for investors is that house prices are falling. According to May\u2019s 2026 housing trends from Realtor.com, the national median listing price has fallen for seven straight months, dropping 2.4% year over year to about $429,500 in May. <\/span>That was the <\/span>sharpest annual decline<\/span><\/a> in Realtor.com\u2019s data <\/span>going back to<\/span> 2017, as sellers faced a reality check <\/span>regarding<\/span> buyers\u2019 affordability.<\/span><\/p>\n

We are undoubtedly in a buyer\u2019s market, with sellers willing to negotiate. However, finding affordable financing is proving to be a conundrum for investors.<\/span><\/p>\n

Investors Need to Throw Out the Old Playbook<\/span><\/h2>\n

In the current unpredictable environment, the old playbook of \u201cdate the rate and marry the house\u201d needs to be thrown out because you might find yourself in an extended engagement with the interest rate, with no <\/span>refinance<\/span><\/a> in sight to bail you out.<\/span><\/p>\n

Things were looking good until the Iran war threw a spanner in the works, <\/span>hiked up<\/span> geopolitical tensions, and increased the cost of living <\/span>even further<\/span> in the U.S.<\/span> However, the problematic housing market is affecting all investors, while additional expenses from higher gas prices, materials, insurance, and taxes are further complicating matters.<\/span><\/p>\n

Falling house prices mean investors can\u2019t even bank on selling at a profit, at least not in the short term. Those able to buy with cash will be the clear winners, which means if you have assets to liquidate, this is the market to snag a deal.<\/span><\/p>\n

Rate Hikes in September?<\/span><\/h2>\n

With Bank of America and Deutsche Bank expecting the Federal Reserve to raise interest rates sometime this year, possibly by 25 basis points in September and likely in October and December as well, according to <\/span>Reuters<\/span><\/a>, it would mark the most aggressive rate increase since inflation spiked after the pandemic.<\/span><\/p>\n

“June Summary ?<\/span>of<\/span> Projections and Warsh’s comments indicate that the Fed’s reaction function is much more hawkish than we thought,” analysts at BofA said in a note, quoted by Reuters.<\/span><\/p>\n

If that proves true, it will bring housing sales to a halt, with sellers growing increasingly desperate and property owners caught in the <\/span>mesh<\/span> of high rates <\/span>and<\/span> hoping to unload their properties, presenting even more <\/span>of an<\/span> opportunity for cash-rich buyers.<\/span><\/p>\n

Plan for the Long Game, Choose Markets Carefully, and Stick to Fundamentals<\/span><\/h2>\n

Every market is different, and choosing those with the highest rents and the lowest comparable prices\u2014with taxes, insurance, local economies, and salaries also factored in\u2014will yield the best returns for investors. Most of these are currently in the <\/span>Midwest<\/span><\/a>. However, low-priced real estate can only do so much when rates go up.<\/span><\/p>\n

The silver lining for investors is that rising rates will affect prospective buyers, too, <\/span>meaning<\/span> affordability concerns <\/span>will keep<\/span> tenants <\/span>in<\/span> your rentals.<\/span> According to a recent survey from<\/span> 2-10 Home Buyers Warranty<\/span><\/a>, 44% of current renters view renting as a long-term rather than a short-term situation, <\/span>with<\/span> 34% <\/span>stating that<\/span> affordability <\/span>was<\/span> the main reason they were unable to make the switch from renter to homeowner.<\/span><\/p>\n

For investors, the low levels of competition to buy deals and high demand for rentals mean there\u2019s never been a better time to invest and negotiate your way to a deep discount.<\/span><\/p>\n

Practical Ways to Buy Rentals in the Current Market<\/span><\/h2>\n

Here is a list of ways to circumnavigate the high-interest-rate era. There is no \u201cone-size-fits-all\u201d approach but rather a combination of many of these strategies to suit your specific market:<\/span><\/p>\n