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Source: www.foreclosurelistingsnationwide.com
Fed Calls Another Running Play at Fourth and Goal
Looking at fourth down and goal with time running out, and having resorted to every trick in the playbook, including lending billions to help out the nation s and the world s struggling financial systems, Ben Bernanke and his team over at the Federal Open Market Committee tried a run up the middle one more time Wednesday, lowering the ever-popular federal funds rate by half a percent to 1 percent.
A huge rally on Wall Street the day before (almost 900 points) anticipated the cut, although some analysts were hoping for more than 50 basis points. More importantly, many are looking for this move to signal the lowering of mortgage rates to help out struggling homeowners trying desperately to stay in their homes.
In its official statement, the Federal Open Market Committee for the first time in many months did not cite the nation s continuing housing contraction as one of the primary reasons for the cut.
This time the committee is citing a decline in consumer spending, slow economic activity overseas and the intensification of financial market turmoil as key concerns. AND, the committee seems to be patting itself on the back this time for all of its recent policy decisions, although it still admitted that downside risks to growth remain.
As The New York Times is reporting, the Commerce Dept. released its report on consumer spending this morning and the news is not good. Personal consumption for Q3 2008 fell at an annual rate of 3.1 percent, the biggest drop since 1980, when the economy was in a deep recession.
Jobs are being cut all over the country, people are losing their homes to foreclosure and credit card debt is out of control. All told, many analysts are already declaring that the American economy is now officially in a recession.
According to figures provided by the Federal Reserve, consumers in this country have charged up $900 billion in credit card debt. The Associated Press reported in BusinessWeek this week that the Financial Services Roundtable, a financial industry alliance, and the Consumer Federation of America have joined forces in asking federal regulators to do something to reduce consumer credit card debt by as much as 40 percent.
Between credit card debt and a full-blown mortgage crisis on its hands, the Fed is less worried about inflation at this juncture and more focused on the reluctance of banks to loan money, according to the Times.
Whether this is the Fed s last hurrah before a new administration takes office in January or not remains to be seen. Still, the next president is going to inherit many problems, and a glut of foreclosures appears to be one of them.
Potential homebuyers and real estate investors looking for bargain properties will probably have at least all of 2009 and maybe even 2010 to shop around. There is obviously more pain to come before we see daylight at the end of this tunnel.
What do you think about the Fed s latest move? Will it make a difference where you live in terms of reducing foreclosure activity? We d like to hear your opinion.
Source: foreclosurepulse.com
As Home Prices Plummet, When Will You Buy?
Home prices in 20 of the nation’s major metro areas in July were collectively down 16.3 percent from a year ago, according to the S&P/Case-Shiller Home Price Index released today. Prices in those metro areas were down 19.5 percent from their peak in July 2006.
“There are signs of a slow down in the rate of decline across the metro areas, but no evidence of a bottom,” said David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s, in a press release issued to announce the numbers. “Little positive news can be found when cities like Las Vegas and Phoenix report annual declines as large as -29.9% and -29.3%, respectively, and all 20 cities are still in negative territory on a year-over-year basis.”
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Las Vegas and Phoenix posted the two biggest annual declines in home prices of the 20 metro areas tracked in the report, followed by Miami with a 28.2 percent decline and Los Angeles with a 26.2 percent decline. Charlotte, N.C., home prices were down 1.8 percent from July 2007, the smallest annual decline among the 20 cities tracked in the report, followed by Dallas, which reported a 2.5 percent annual decline.
Does this make it a good time to buy real estate? June Fletcher of The Wall Street Journal sagely advises that the answer is “For some people, yes. If you …
- have access to credit
- have fat cash reserves
- aren’t already over-exposed in real estate
- have a secure job or income stream
- expect to hold the property for at least two years”
But be forewarned, prices are expected to fall further, and will take awhile to rebound, according to many economists.
“I think this time residential housing is in the 100-year flood, and I think it’s going to take a long time to recover,” said David Shulman, senior economist at the UCLA Anderson Forecast, at the Zelman & Associates Housing Summit in Dallas on Sept. 17.
Shulman said he expects home prices nationwide to go down 25 percent from peak to trough, although he acknowledged that prices could “overshoot to the downside.” And while modest appreciation could resume in late 2009, prices won’t be back to their 2006 peak until at least 2016, possibly as late as 2020 in some markets, according to Shulman.
(More from Shulman and several other leading economists in the October issue of the Foreclosure News Report, scheduled to be available in mid October.)
We’d like to hear from you when and if you plan to step in and start buying. Now, in 2009, or will you wait until 2020 when everyone has forgotten about this housing slump and is raving about skyrocketing home prices?
Source: foreclosurepulse.com