Two blogs ago I posted regarding a news hour report. One of the issues I hit upon and spent time on in the blog was the credit issue we are becoming faced with. This week I saw a show about the same issue. I love it !

What does the current liquidity problem mean for us as Realtors? (You can read my previous blog if you want to understand what the credit crunch is about)

What it will mean is higher rates and tighter credit. I think the Fed may be at or close to the point where they are not going to adjust rates downward. Next March we have Fannie Mae and Freddie Mac Tightening credit based on credit scores. If cash is tight then demand is up supply is short so guess what ! Interest rates go up because cash is borrowed at a higher price.

Bottom line is the markets function on the belief that the cash is there. Not the actual existence of the cash. The cash is in the form of an asset much in the same way you have cash in the bricks of your home. What the housing mess did was shake the belief that the bricks could be converted easily to cash if needed and that the bricks would increase in value.

If you have fence sitting buyers I would say to you NOW IS REALLY THE TIME TO BUY. We have a buyers "perfect storm", good prices, good rates, good inventory. I think in 2008 we will see the good rates part of this storm change.