Real Estate Blog - Feds Ride to the Rescue - Good for the Stock Market but what about Homeowners?

Home : Blogs : Donna Yates, Georgia Realtor Georgia Real Estate,Blue Ridge Mountains : North Georgia Blue Ridge Mountains Real Estate Blog, Donna Yates, Realtor

Feds Ride to the Rescue - Good for the Stock Market but what about Homeowners?

Stocks plunged due to fears of a recession and I am sure you've heard by now that the Feds cut the funds rate by three quarter of a percentage point to 3.5% down from 4.25%. This is the biggest rate change since November 1994. Market conditions were deteriorating rapidly and fear being a very strong motivator, caused the Feds to ride to the rescue and try to calm the market. This action by the Feds also signals their concern about a recession but even they say the rate cut is not an instant fix.

Surely, it is a step in the right direction in boosting the economy but is it enough? I think it's very doubtful that this rate cut alone will be the cure all. Economic indicators have not changed which means the economy is still facing a recession. Some would argue that we are already in a recession because of some formerly hot market areas (not limited to just these states) in Florida, Nevada and California where a dramatic decline in the housing sector and an increase in foreclosures have occurred.

Bush will meet with his congressional leaders this afternoon and the feeling is Bush is not going to close any doors that could be viable options. His strategy is to get money into the hands of the people who will spend it most effectively to directly stimulate the economy. There is a possiblity that an economic stimulus plan could be given to the President within three weeks but will this be good enough for WallStreet and Mainstreet?

The market rallied this morning and it may have been due to more opportunistic buying. So the rate cut is a big day for the markets...

BUT, what about Homeowners?

More immediate help would come in loosening constraints for Fannie Mae and Freddie Mac
Loan rates have started to fall
30 year fixed rate at 1:05 eastern time had dropped a quarter point down to 5 3/8 from 5 1/4 just yesterday. This is a 2 1/2 year low
ARM resets will be lower
Home Equity Loan rates will be lower

The National Association of Realtors reports in the next few months, existing home sales will probably hold steady based on pending sales which is a forward looking indicator. By summer, we may see home sales rise throughout the year and continue to improve in 2009. Homeowners need to remember that real estate is a long term investment.

Donna Yates, Georgia Realtor
North Georgia Blue Ridge Mountains
Mountain Investments of North Georgia
706-633-0644 cell
donna@ellijay.com

www.move2northgeorgia.net

Posted by Donna Yates, Georgia Realtor Georgia Real Estate,Blue Ridge Mountains on 01/22/2008 12:26 PM

Comments (8)

north georgia blue ridge mountains, georgia real estate, donna yates realtor, fed cut rates, homewowners, mortgages

Originally posted at: North Georgia Blue Ridge Mountains Real Estate Blog, Donna Yates, Realtor: Feds Ride to the Rescue - Good for the Stock Market but what about Homeowners?

This post has been included in Georgia Information

8 Comments on Feds Ride to the Rescue - Good for the Stock Market but what about Homeowners?

JAN

2008

good article... I hope it helps!

Jason: Surely, it can't hurt but more is needed in my opinion. I'm glad the Feds made this move now instead of a week from now even if fear was the motivator. Sometimes, fear isn't all bad. The talk is that they may make another cut next week. At least they got off their tails and did something.

Donna:

I'm glad to hear about the rate cut. I don't want to trivialize those efforts. However, let me play devil's advocate for a minute. Rates can be 1%. However, if buyers insist on offering $20,000 - $40,000 less than list price (when the list price is already discounted), you might still have issues with closing transactions. Am I being realistic or pessimistic?

Thanks to the FED for lowering the rate. That will not be the last cut.

David: Absolutely, I agree that you will have problems closing because you won't close, the offer will fall over dead more than likely since any astute seller is not going to accept a ridiculous offer from a buyer unless the seller has no other choice and maybe, time is running out. The value of a home is what a qualified buyer is willing to pay but that certainly doesn't mean a buyer should offer a seller whatever they feel like offering even though some will. At the same time, seller's should not hold out for a ridiculous sale price either. I guess you can't blame a buyer for trying but I think Realtors need to be sure they are educating and comjmunicating the true market conditions to their respective clients. I agree that you will have buyers trying to lowball as much as they can regardless of the rate. When it was a seller's market, sellers were inflating their prices too, and now that it's a buyer's market, the tables have turned.

JAN

2008

Interest rates are falling, prices are falling, foreclosures are up, it is a buyer's paradise!!

JAN

2008

We are going to have to wait and see if any of this helps. The phones are just not ringing wiht super rates in place!

Donna I am a little on the fence about the rate cut. Reason is because how much is enough? Some say a recession or depression is near. I am not sure I want to believe that. See we are the most powerful nation in the world, and we have survied so much in our rich history. Of course things are not great and us as americans seem to live above our means, but somehow we tend to make it. That is whats great about this country we live in. We are fowarded the opportunities to do as much as we please. I feel that success is when opportunity meet preperation, and I think we are prepared a sindividuals to take advantage of the opportunities that has been placed before us. Homeowners especially. Give or take the increase in foreclosed housing, we still have to keep the big picture in mind and capitalize on what is really happening to the ecomomy.

Robert: Makes sense to me. Thank you for your comment.

Jim: Fear! That's the enemy. Thank you for your comment.

Freddie: Some say we are already in a recession. Look, when you've been around long enough, you realize that everything is a cycle. I also feel that fear is what is holding so many back. No pain, no gain. Life, itself is a risk. The media certainly did a fine job of bringing so many to near panic with all of their sky is falling preaching. I have no doubt that if the media started reported the positives in real estate, the psychology of home buyers would turn around. Letting fear and panic put us in a deep freeze only contributes to making all the negative predictions an actual reality. And that's "the opinion of this humble Realtor" in North Georgia to borrow a line from one of our fantastic Active Rain members (Mike in Tuscon).

This blog does not allow anonymous comments