By Deke Rothfuss
The passage of the “One Big Beautiful Bill” (OBBB) through the U.S. Senate on July 1 and the House on July 3 and its signing into law by President Trump on July 4 has ignited a wave of emotions across the United States. Individuals and corporations alike are grappling with the implications of this sweeping legislation, which extends the 2017 Tax Cuts and Jobs Act, introduces new tax breaks (e.g., no tax on tips or overtime, increased child tax credit), and cuts social programs like Medicaid and SNAP.
While the promise of tax cuts fuels optimism, the Congressional Budget Office (CBO) projects the bill will add $3–$3.8 trillion to the federal deficit over the next decade, raising concerns about inflation, reduced economic growth, and job displacement.
Amid this uncertainty, many are questioning the future of the economy, particularly the housing market. Where will interest rates go? Have we missed the strong housing market? And what does this mean for buying or selling a home?
Economic Uncertainty and Interest Rates
The OBBB’s tax cuts, such as 100% expensing for R&D and manufacturing, are projected to boost GDP by 4.2–5.2% in the short term and create over 1 million jobs annually, according to the Council of Economic Advisers. However, the CBO warns that the bill’s deficit spending could drive inflation, potentially pushing the 10-year Treasury yield — currently around 4.3% after peaking at 4.629% in May 2025 — higher as borrowing costs rise.
President Trump’s public pressure on Federal Reserve Chairman Jerome Powell to cut short-term rates adds complexity. While Trump claims inflation is low, proposed tariffs (25% on Mexico/Canada, 10% on China) could add nearly 1% to inflation, per Citi strategists, potentially forcing the Fed to pause rate cuts or raise rates. This could elevate long-term mortgage rates, which are already near 7%, a 20-year high.
The risks are real: higher deficits may erode investor confidence in U.S. debt, as Moody’s May 2025 downgrade suggests, potentially triggering a bond market crisis. Conversely, tariff revenues could offset some fiscal concerns, stabilizing yields.
For now, the economy faces a delicate balance: growth from tax cuts versus inflationary pressures and job displacement risks, particularly in healthcare due to Medicaid cuts affecting 16 million people. Corporate America may also hesitate to invest if tariffs reduce U.S. dollar revenues, leading to workforce reductions and heightened insecurity.
Housing Market Challenges
The housing market reflects this uncertainty. High mortgage rates and near-record home prices have dampened affordability, a top voter concern. The National Association of Realtors predicts 30-year mortgage rates will hover between 6–7% in 2025, potentially rising if inflation intensifies.
Homes are starting to languish unless they are turnkey, competitively priced, and in desirable locations. Buyer hesitancy is palpable, driven by fears of economic slowdown and job insecurity, while sellers face confusion and angst over declining demand. Have we missed the strong housing market? Likely, yes — but strategic buying or selling remains viable with the right approach.
If you’re considering listing your home, consult a real estate agent with deep local and national market insights. Pricing is critical, but so is marketing your property effectively, especially to buyers relocating from urban centers like New York City. A well-connected realtor can tap into networks in major cities, ensuring your home reaches the right audience. Realistic expectations about pricing and market conditions are essential to avoid prolonged listings.
NYC Mayoral Election and Real Estate
The upcoming New York City mayoral election in November adds another layer of uncertainty. The next mayor will face budget pressures from the OBBB’s Medicaid and SNAP cuts, potentially forcing trade-offs between public safety and social programs. A mayor prioritizing safety might boost NYPD funding, but fiscal constraints could limit this unless state or federal aid increases.
Meanwhile, the bill’s tax provisions, like the $40,000 SALT deduction (phased out above $500,000 income), may benefit some NYC residents, but the long-term SALT cap after five years at $10,000 could push high earners and corporations to relocate to low-tax states like Florida. This risks weakening demand for NYC’s commercial and luxury residential properties, potentially stalling price appreciation. Suburban buyers relying on NYC home sales may find less capital to invest if their properties devalue.
The 10-Year Treasury as an Economic Pulse
To gauge economic confidence, watch the 10-year Treasury yield. Rising yields signal optimism, inflation, and a strong economy, as investors demand higher returns. Falling yields indicate a flight to safety, often tied to economic slowdown or deflation.
With the OBBB’s deficit spending and tariff risks, yields may rise if inflation accelerates, but a loss of confidence could also trigger volatility. Markets are already turbulent, driven by domestic policy shifts and geopolitical risks. The 10-year yield is a barometer of whether investors lean into riskier assets like stocks or seek safety in bonds.
What Does This Mean for You?
Is it time to buy or sell? The answer depends on your circumstances and the market conditions.
Buying now is challenging due to high rates, but a well-priced home in a desirable area can be a smart long-term investment if rates stabilize.
Selling requires competitive pricing and a realtor who can market broadly. Holding may be wise if you anticipate rate relief in late 2025.
The key is partnering with an intelligent real estate agent who can demystify local and national trends, reducing anxiety and clarifying your options. In a volatile economy, their expertise is a luxury worth investing in. For now, we’re just talking real estate, but the principles apply to navigating any complex decision in uncertain times.
Deke Rothfuss is a licensed real estate salesperson at Douglas Elliman working as part of the Engel team in New Canaan, CT. Deke most recently worked at Goldman Sachs & Co for 38 years in NYC, most recently as a VP Municipal Portfolio Manager of SMA’s for high net worth individuals in the GSAM division.
