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Where do we go from here?

Our clients continue to ask opinions on where the market and interest rates are headed. From my vantage point, we are looking at another cut in March of the rate at which the FED loans funds. This would bring the rate down to 2.5%. That is still not as low as we have seen in recent years but along with a good economic stimulus package will at least firm up home prices and make equity loans more accessible. We may see a further drop in mortgage loan interest rates but as Treasury note return goes up the end of a drop in mortgage interest rates might be seen before the end of 2008. One hope I have is that the jumbo limit for Fannie Mae and Freddie MAC will not be raised over $500,000. First time home buyers and young people still depend on low rate equity loans as part of a package to get into their dream home. We are already seeing a stabilizing of prices on the Vineyard and a surge in activity. There were two articles in the Vineyard Gazette discussing the current market. Island Housing Starts Were Up (Notice typo in headline!) and Sale of Homes Fell Last Year Wells Fargo continues to be an excellent source for comment on the economy. Their Financial Market Strategies seems as reliable a forecast as any.

Posted by Fred Roven on 02/01/2008 12:44 PM

Comments (4)

edgartown, massachusetts, dukes county, marthas vineyard real estate, mortgages, interest rates, homes sales, home prices, conforming, jumbo loans

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4 Comments on Where do we go from here?

There is way too much talk going on about this topic. There is nothing new under the sun. Let us look back in history and learn. What happened last time, our home market took a dip? And the best way to handle things are to "wait". I enjoy the blogs. I hope 2008 is a great year for you. Lu

02/01/2008 12:52 PM

by Lu Kalaj (The Michigan Group)

Fred: I don't mean to be negative, but the Fed cutting the short term rates and the stimulus package are probably not going to do much for the housing markets. In the long run they might even end up hurting the housing markets.

I just wrote a blog on this subject, so if you would like to check out why this is the case, please feel free to look it up, but the short of it is that the dollar is already weak and the government printing more money is only going to make it weaker! This means inflation, which means higher rates in the long hall.

What they need to do is to fix the credit markets and housing will take care of itself!

Bob Mitchell

ValueList Real Estate Services, Inc.

02/01/2008 01:00 PM

by ValueList Real Estate Services, Inc.

Inventory is growing, prices are down, sellers are willing to make deals and interest rates are the lowest they have been in years. I can not predict the future. But, I can say that now is a good time to buy.

02/01/2008 01:04 PM

by Jim Houlihan (Coldwell Banker)

I agree this is the time to buy. Convincing the consumer is the key. And, thanks Lu, a great year for you also. I am afraid I am not a very good "waiter".

02/12/2008 06:30 PM

by Fred Roven (Martha's Vineyard Buyer Agents)

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