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The Economy vs The Market – Why They Don’t Move Together

Last Tuesday I stood in a Cambrian kitchen, watching late-afternoon sun hit the oak floors just right. A couple had come straight from work; they loved the yard, hated the interest rates, and asked the question I hear every week: “If the economy looks shaky, why do some homes still sell fast?” “What moves the market?” 
Here’s the honest answer: the economy is the world you and I live in—jobs, wages, prices at the grocery store—measured by reports that mostly look backward (last month’s inflation, last quarter’s GDP). The market is a prediction machine; it looks forward, and prices can jump the moment fresh data beats (or misses) expectations. That’s why bonds and mortgage rates can move on a single report, even if your grocery bill hasn’t changed yet.

What moves “the market,” and why that shows up in mortgage quotes

Investors watch a handful of reports like a hawk—inflation (CPI), jobs, and growth. If inflation cools a bit faster than expected, bond yields can slip within minutes; lenders often follow with slightly better mortgage pricing the same day. When inflation surprises higher, the opposite happens, and buyers feel it in their monthly payment math almost immediately.
If you’ve ever refreshed a rate quote at 11:00 a.m. and seen it reprice by lunch…that’s the market reacting in real time.

This is why for sellers, a listing can feel quiet one week and lively the next—nothing changed about your home, but the payment did. And For renters, this is why landlords aren’t instantly raising or cutting rents on a CPI print; rents track vacancy and job trends and adjust gradually as leases roll over.

What moves the market’s real estate (and why it has its own rhythm)

Housing dances to a different beat: mortgage rates, inventory, and local demand.

  • When rates ease and inventory stays tight, your buyer pool grows. I see it at open houses: more second looks, more “we’re ready to write.”

  • When several similar homes list in the same week—or rates jump—buyers get choosy, days on market stretch, and the strongest offers focus on contingencies and timing rather than price alone.

For renters, the picture is slower but just as real. A new Willow Glen or North San Jose apartment building opens, vacancies rise, and suddenly you’re seeing a flexible move in date or  reduced deposit offers. When job growth is strong and vacancy is scarce, concessions disappear and renewals firm up. In short: markets twitch; housing breathes.

A kitchen-table explainer: Fed rate vs. mortgage rates

Here’s the quick way I explain it at the kitchen table:

  • The Fed Funds Rate is an overnight rate between banks. Think short-term stuff: credit cards, HELOCs, lines of credit.

  • 30-year mortgage rates track the bond market, especially the 10-year U.S. Treasury and yields on agency mortgage-backed securities (MBS). Lenders start with that 10-year yield and add a spread to cover risk, servicing, and prepayment. That spread widens or narrows with inflation expectations, recession odds, investor demand, and volatility—so mortgage rates can move even when the Fed is standing still.

If that feels fascinating (or maddening), good—because our next post digs into it step by step. Check out this blog: “Fed Funds Rate and Mortgage Rates Explained”—I’ll break down the 10-year, MBS spreads, and why lenders sometimes reprice twice in the same day.

Two real-life mini stories

For sellers (Los Gatos/Almaden/Cambrian)

Last month, I watched rates drift down a notch while inventory stayed lean in a Los Gatos micro-pocket. The list price didn’t change. What changed was payment power: more qualified buyers booked showings, and our strongest offer improved not just on price, but on certainty—clean terms, verified funds, and a comfortable close date. The economy hadn’t “boomed”; the market simply believed inflation was easing, bond yields slipped, and mortgage math opened a door.

For renters (Willow Glen/San Jose)

A client timing a lease renewal noticed a couple of tech teams slowing hiring. Within a few short weeks, vacancies ticked up, and renewal terms got friendlier—slower rent growth, small concessions, and the ability to shift move-in by two weeks without penalty. No fireworks in the headlines. Just the housing cycle breathing as supply and local jobs found their balance.

What to watch (without doom-scrolling)

  • For homeowners/sellers: Track weekly mortgage rates and neighborhood inventory—those two shape your buyer pool more than the stock ticker. If you’re 60–90 days from listing, we’ll build a plan around likely payment ranges your buyers will face and the supply runway you’re competing with.

  • For renters: Keep an eye on vacancy in your submarket and local hiring. If vacancy rises, job growth chills or layoffs begin, you may have leverage for a better renewal or move-in special. If vacancies tighten, you’ll want to act early and lock terms.

Quick reference: economy vs. market

  • Economy = life as you feel it now, measured by backward- or current-looking reports (jobs, GDP, inflation).

  • Market = what investors think is next, priced into bonds, stocks, and—through bonds—mortgage rates.

  • Housing follows rates + inventory + local demand; rents follow vacancy + wages, adjusting more slowly.

Sources

Ready for your next move?

Whether you’re weighing a sale in Almaden, shopping in Willow Glen, or timing a purchase in San Jose, I’ll cut through the noise with a clear, numbers-first plan—your micro-market inventory, today’s mortgage math, and a step-by-step strategy that fits your life. It will be the Most Supported Move You’ll Make in your lifetime.

Wendy Marioni — Luxury Realtor® | Silicon Valley
The Most Supported Move You’ll Make
Call/Text: 408-529-0279 • wendymarioni.com

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