JOHN GIVES THE FED TOO MUCH CREDIT.
I'm not so sure that prospective home buyers determine their buying schedules by the action or inaction of the Board of Governors of the Federal Reserve and what Chm. Bernanke says.
I suspect that their buying motivations are job transfers, family needs, don't want to rent, move for family, move for schools, and their personal budget which takes a hit each time they buy a gallon of milk. etc.
Real estate market is fueled by consumer need and ability.
Real estate market is slowed when folks are scared to death that the country is going to Hell in a hand basket.
Well, after buying groceries this week I believe we should cancel our home buying tour this weekend.
Just when you think the housing market can’t get more difficult, Ben Bernanke spoils the urgency argument for home sellers. The Fed’s recent commitment to maintain historically low interest rates for the next two years has erased hope for many who were waiting for buyers to purchase due to concerns over the potential for rising rates. Additionally, concern over falling home prices has many buyers confident that playing the waiting game is to their advantage. And with conditions as they are, it’s hard to disagree.
Overall, this is not good news for sellers—and not good news for the rest of us either—but it appears that “fence-sitters” can relax in the knowledge that super-low interest rates aren’t going away in the foreseeable future. In fact, rates could get even better, with some predictions that we might soon see rates for 30-year fixed loans in the 3’s.
What this tells us is that the Fed is very much aware of the weakness in the economy and the significant potential for another recession. (It’s my opinion that we’re already entering that the second recession.) With the economy continuing to weaken—increasing job losses, stagnate or declining wages and consumer confidence virtually erased—the future of the housing market in many areas remains bleak. Yet while the Fed’s actions were intended to aid the economy, the end result for housing will likely be additional slowing of the market.
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