Economic Crosswinds Are Redefining the Market
As we move through the spring of 2025, the real estate market is being shaped less by local trends and more by broader economic forces that are impossible to ignore. Elevated interest rates have, of course, been with us for some time. But more recently, new headwinds have emerged: concern over the President’s tariffs and trade policy, a volatile stock and bond market, softening consumer confidence, a contracting U.S. economy, and growing anxiety that inflation, though temporarily tempered, might soon reignite. Together, these forces are prompting buyers to take a more cautious, calculated approach to their real estate search.
At the start of the year, there was reason for optimism. Inflation had been gradually retreating, and expectations were high that mortgage rates would follow. They did. Rates opened the year above 7% but declined steadily, reaching 6.6% in early April. Buyer activity was both solid and steady. Private showings were strong, and open houses were crowded throughout the first quarter.
At Elysian, we saw this firsthand. The level of engagement across our listings, open houses, and private showings gave us every reason to believe that 2025 would bring a rebalancing of the market. And for a time, it did.
From Momentum to Uncertainty: April’s Sudden Turn
Then, on April 9th, the President followed through on his pledge to implement a sweeping package of global tariffs – and the bond market reacted instantly. Yields on the 10-year Treasury spiked, and mortgage rates once again breached the 7% mark. Meanwhile, consumer confidence, as tracked by the Conference Board, dropped from a reading of 104 in January to just 86 in April.
Suddenly, an eerie quiet settled over the local market. At first, agents attributed the lull to the Easter holiday and school breaks. But as April wore on, it became clear: the weekly surge of foot traffic that had defined open houses in the post-COVID era had vanished.
This isn’t a collapse in demand, it’s a pause. Buyers are still motivated, but many are sidelined by uncertainty: Where is inflation headed? Will the U.S. economy continue to constrict? Are current trade policies here to stay, or will they be replaced by something more stable? Until some of these questions are resolved, many buyers will remain in a holding pattern—not out of fear, but out of caution.
Hesitation Is the Opportunity
So, what’s a buyer to do?
The short answer: buy.
This kind of environment, where hesitation replaces frenzy, is where opportunity often hides. With fewer competing offers and slightly more room to negotiate, buyers who move now may find themselves better positioned than those who wait for perfect clarity. The President clearly responds to movements of the bond market and it will continue to reign in his worst impulses. In doing so, it will both provide stability and restore confidence. In other words, today’s uncertainty will likely prove to have been a brief but strategic window.
As Warren Buffett once advised: “Be fearful when others are greedy, and greedy when others are fearful.” This may be one of those moments.
So, why the certainty that the bond market and its vigilantes will ultimately prevail? A brief primer and a deeper dive may provide some clarity.
The Bond Market: The Quiet Power Behind the Shift
The U.S. Constitution defines three branches of government—executive, legislative, and judicial—each designed to check the power of the others. Recently, those checks have weakened. Congress has ceded much of its authority to a president who has been accused by many of executive overreach. The judiciary has stepped in at times to provide limits, but, as Andrew Jackson purportedly quipped, “John Marshall has made his decision; now let him enforce it.” And, while the press has traditionally served as an informal fourth estate, its influence has grown more tentative – limited, in part, by the chilling effects of litigation and political polarization.
That leaves the bond market.
It doesn’t legislate. It doesn’t campaign. It doesn’t hold press conferences. But it reacts swiftly and decisively to economic signals. When government policy raises alarms about inflation, deficits, or instability, bond yields rise, and the cost of borrowing increases for everyone, from Washington to Main Street. This spring’s rapid spike in Treasury yields following the President’s tariff announcement was a case in point.
In this way, the bond market has emerged as a kind of unofficial fifth branch of government: one that doesn’t write laws but often shapes the environment in which those laws operate. When institutional checks falter, capital markets often step in, and their verdict can be felt in everything from corporate financing to monthly mortgage payments.
For the housing market, that influence is immediate. Rising yields translate into higher mortgage rates. Higher rates cool demand. Fewer showings. Fewer offers. More hesitation.
But just as markets react swiftly to instability, they can also respond just as quickly to signals of restraint or clarity. Should the bond market sense that inflation is under control or that fiscal policy is rebalancing, yields could retreat, and rates would follow.
A Final Word from Elysian
At Elysian, we track these shifts closely – not just as economic trends, but as signals that affect real people, real neighborhoods, and real decisions. From pricing strategy to offer timing, these movements shape the advice we give our clients every day. It’s why I write these blogs. And it’s why I continue to stay focused on what matters: navigating change with intelligence and perspective.
Markets don’t remain directionless for long. Eventually, capital finds conviction, policy adjusts, and momentum returns. The question is never if confidence comes back—it’s when, and under what conditions. Whether driven by a cooling of inflation, a recalibration of trade policy, or a more stable bond market, clarity always reemerges. And when it does, the shift tends to swift- and decisive.
If you have questions or concerns about real estate, feel free to give me a call at 330-8750.