Morning Update | May 19, 2025 | The Debt Downgrade, and a Lot of Content
Moody's finally calls it what it is.
Good morning, Nation!
We’ve been downgraded (again.)
Moody’s Downgrades US Debt
No place to start but here. Moody’s finally downgrades the US’s credit rating.
Want to see the counties of the world’s credit ratings? Here you go (and I would have never thought we would be behind the EU.)
Moody’s is not the first credit rating agency to downgrade the debt, but Moody’s ratings are considered by many to be the most respected, and with its downgrade, the markets will react — and not react well.
Rates will jump for sure, and all across the board (which is already happening, btw) so if you have clients who are in the market right now, check in with your lenders.
Why Is It Happening?
Well, if you read this update with any level of regularity, you know that the number one issue for me is US Government spending and the debt.
So guess why? Because the fiscal budget for 2025 is in the process of being approved.
I don’t care that the government spends. All governments spend and some spending is both necessary and legit. It is why we pay taxes.
I care that it spends more than it takes in each and every year and continues to do so even though the debt levels continue to rise.
Yeah DOGE was supposed to eliminate waste (I think it probably did help to some extent) and tariffs are supposed to create more income and more fair trade practices (and maybe they could at some point), but when your stated goal is to reduce the deficit and reinstate fiscal responsibility, adding another $2T just makes no sense to me.
Apparently, I am not alone.
Debt, Visualized
I’ll close with two charts:
The total US debt
The interest paid on the debt (and this one is super scary to me because this is not fixed rate debt, it needs to be refinanced at the current rates — which are rising.
I don’t understand why no one with the power to do something about it seems to understand that you cannot spend more than you take in forever.
It boggles the mind that we operate this way.
Meanwhile, the already strapped citizens of the US get punished with higher rates on houses, cars, credit cards, and every other possible form of borrowing. And I don’t think that I need to remind you what prices for goods and services have done in the recent past, either.
Higher rates. Higher prices. More deficit spending.
So frustrating.
RVA Market
Despite the continued dysfunction in DC and elsewhere, our market continue to kinda chug right along.
The Monday to Wednesday readings will show the absorption, while the Thursday to Sunday readings will show higher inventory.
So when you measure matters.
That said, we still have +/- 1 month of resale inventory and 7 days on market. No matter how you look at it, the market is holding steady — despite the news elsewhere.
So there is that.
Content
Some interesting tidbits this morning that crossed through my feeds recently:
Charlie Munger’s Psychology of Human Misjudgment is a classic speech he did for Harvard Business School and it talks about all the ways we screw up our thinking. Here is the breakdown. I love this one.
Did you get a real estate tax bill? Perhaps the City stores the real estate tax bills computers in the water treatment plant. This is going to be a total cluster for the City to undo.
I found this interesting — Zillow knows when the price is right for a home. How? This ratio. You can use it, too, to show clients if they have come in too high on pricing.
Want to know what is actually happening in housing and lending? Urban.Org’s montnly housing report is phenomenal.
We are now sharing data with our bordering MLSs. I’m sure it will lead to more agents from out of our market trying to come in and sell. I can’t wait ...
Are you anti-sprawl? Well here is an argument that is PRO-sprawl.
Enjoy the day!
Rick