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The power of the Fed

Last week the stock market was taking some hits because Bernanke hinted once again that he may slow buying bonds at the clip of $85 Billion a month. Well the Board of Governors took turns during the week to clarify, that they will stand behind the economy for as long as it takes to get it on track. Well I found it confusing, but the stock market muddled through the week, now today, the start of the new quarter the stock market added a 1% gain.

I find this alarming that a quasi government agency can make pronouncements, and the stock market reacts. I like the way things are going, but really think we need to have the markets free from this bond buying process. I’d like to see interest rates float with the economy. I know mortgage rates rose a half of a point, to a full point during the week, but think they will recede again in order close some transactions in progress.

These random rumblings only make people think they can afford to make big financial commitments based on the way things are, rather than what might happen when we get past a highly manipulated market place. It continually surprises me that people are looking the housing market as a hedge against inflation when the Fed hasn’t been able to muster more than 2% inflation with Trillions of dollars added to the money supply.

Higher Interest Rates

This was a long time coming, but mortgage interest rates are rising at a pretty good clip these past few weeks. The Case Shiller report today propped up the stock market showing a 1.7% price increase for the month. This was lead by new construction housing units at a five year high, which in turn put consumer confidence at a five year high.

Well, we are coming into July, and last July we didn’t see price reductions like we traditionally do. This year will be different as we have a slight rise in inventory, and what will be seen as an unstable mortgage money market. My hope is that the price of housing will start it’s decline. I mean that as a way of getting us to a much more healthy economy.

I write about debt, a lot, because that debt has been the basis of the economic recovery. The private debt is pacing government debt. Consumer confidence seems to have been a green light for taking on more debt. I’d like to know how many consumers actually work out the debt repayment plan. Like student loans don’t seem to have an exit strategy.

I’m think at some point there will be an awakening that housing debt is long term, and you need to plan for that accordingly.

 

Lower Housing Prices

What a difference a week makes. I track a certain market and a week ago my pricing came in at $775K, today it is $756K. The difference is always in closed sales. Each week more properties close, and about a month ago we had some pretty high … [Continue reading]

Slowing Sales, or Growing Inventory?

I noticed more For Sale signs today than I have seen for a while. I just love unscientific data assurances as a way to gauge a market place. Seriously I did look at statistics today, and new listing are out pacing pending sales. In my immediate area … [Continue reading]

Interest Rates Creeping Up

Now that the Spring selling season is winding down, and we are heading to the summer, it looks like mortgage interest rates are creeping up, and inventory is getting to be more stable. It seems like more houses are on the market for a little bit … [Continue reading]

The International Real Estate Market Place

We just came back from Mexico, and it is a booming economy. There are millions of desperate people there for sure, but the amount of wealth, raw, naked wealth is much more evident than it was when I used to go there a decade or more ago. I also want … [Continue reading]

The Listing Season may be Over

By now everyone with a strategy has already pulled the trigger. There won't be any more surprises this year in terms of listings, or sales. People can go ahead, and bid up properties all they want, but in the broader market place of Seattle, and … [Continue reading]

Now Rising Inventory

Last post was about rising home prices, and now we have a rising inventory of homes for sale. A Real Estate sales person told me we were only down 6% in inventory from historic norms, but it looks to me like we are down 40% from last year. Maybe last … [Continue reading]

Rising Home Prices in Seattle

Prices have risen a lot in the past year. There is a claim that property prices have risen 10% so far this year. Well, that is claim based on the excessive bidding on properties in February, and March. I've never seen a more frenzied market place, … [Continue reading]

The Falling Yen

I've left Real Estate alone because we have our family home for sale, but today I just want to clear out some of the thoughts I've had about the coming housing market. First we have the exit from Gold, that was brought about by Cyprus first … [Continue reading]