Inverted Curve

The interest rate curve has inverted. What this means is that US Treasury bonds with longer terms are yielding less than those with shorter maturities. In market-based analysis, this shows that investor demand is higher for long term US Treasury bonds. What does this mean for real estate and the Bay Area market? An inverted interest rate curve is usually a signal that the economy is headed for a recession next year, as investors flock to US Treasuries for safety. If the economy heads into recession, the Feds may slow down the rate increases. This would be good for real estate. A recession though would be bad for real estate. A recession normally brings job losses, decreased government revenue, a flight of capital, etc. Given that many jobs created in California over the last five years centered on real estate, it could spell a double whammy for our state.