Minutes of the April 29-30 Federal Reserve Board meeting, where the central bankers cut the key Fed Funds rate by a quarter point to 2%, show this participant angst about real estate …
The housing market had continued to weaken since the previous meeting, and participants saw little indication of a bottoming out in either housing activity or prices. Housing starts and the demand for new homes had declined further, house prices in many parts of the country were falling faster than they had towards the end of 2007, and inventories of unsold homes remained quite elevated. A small number of participants reported tentative signs that housing activity in a few areas of the country might be beginning to pick up, and a narrowing of credit risk spreads on AAA indexes of sub-prime mortgages in recent weeks was also noted. Nonetheless, the outlook for the housing market remained bleak, with housing demand likely to be affected by restrictive conditions in mortgage markets, fears that house prices would fall further, and weakening labor markets. The possibility that house prices could decline by more than anticipated, and that the effects of such a decline could be amplified through their impact on financial institutions and financial markets, remained a key source of downside risk to participants’ projections for economic growth.
To read the rest of the minutes, CLICK HERE!
NO NO NO NO.
The Fed is all wrong. It’s nothing but UP UP UP and UP.
I know this because Steve Thomas and Truthiness said so. So there.
Where is that donkey Gary Watts these days anyway?
Oil is now $133.34 a barrel.
I hope we’re all ready to pay $5 a gallon at the pump.
What a bunch of incompetent idiots at the Fed … they chose Wall Street over Main Street!
Lee, quit your one-note nonsense. The finest economists in the world can’t agree on the main factors driving this spike. One thing they DO agree on, however, is that the there are SEVERAL factors.
Dow is currently down 200 points after a drop of 200 points yesterday.
Home builder stocked have dropped 10% in the last few days.
This shows that there is no free lunch in economics.
Gas at $5 a gallon is going to kill the OC economy. We’re too dependant on driving.
What’s so funny is the FOMC sounds like they are willingly removing further rate cuts off the table. Hello? The Fed Funds Rate is presently 2%. Even if (scratch that) Even when things become much worse, the Fed doesn’t have any Amo left. They now speak loudly, yet carry a very small twig.
The Markets are getting hammered again. Dow now down 226.
it is sad that everything that is going on seems to effect the OC more than other locations……….
we were sub prime central, option arm central, creative financing central………. and to make matters worse we are very dependent on driving….. so the SUVs are resetting in the middle of all the other resets……… and the cost of everything else is going up while the income pool shrinks………….. scary times
let’s get this over with and set the fed rate to zero……. don’t plan to travel for the rest of your life, time to start manufacturing everything in the US
Wow. Things are going to hell in a hand basket. How could anyone truely believe the recent “uptick” in sales is anything but a dead cat bounce?
hey lee,
it looks like us (doom and gloom bloggers) were NOT that crazy after all.
my children are learning chinese, they will need it
I was thinking that myself, RealtorDaveE.
Nationalbubble
Unfortunately, the “doom and gloomers” were right. It’s not something I’m proud of. Up until recently, I was never apart of this crowd, but since the stock bubble went kaput, everything changed.
What I want to know is this … How could so many smart people not see what was going on, and not recognize how unsustainable it was. Yes, I think it’s possible to be a smart fella, yet be ignorant or blind at the same time.
I will say this, we need another Paul Volcker now.
Isn’t the operative word in the whole report HAD? the market HAD done this, it was noted that prices HAD done that etc. etc. this was not a foreward looking report.
Ok, I guess I should say this:
Oil HAS passed $133 and keeps going up
For a forward looking report, please see the next thread above.
Nah, those are just gamblers.
National Bubbie,
I just heard something interesting about the Oil futures. During the Senate hearings today where they brought the Oil Exec’s on the carpet, the subject of the Oil Futures came up. One of the Exce’s told the committee that the reason Oil is skyrocketing is that some of these little genius Fund Managers have figured out a way to get around the inter day trading limits. It’s based on a series of swaps and it gets around the limit but what it also does is cause a run away chain of trades, the more oil you buy the more oil you buy. These mangers are investing funds from pensions in these trades. It turns out that the SEC is right now looking into making these swaps illegal. I don’t think I’d go near Oil or Commodities right now.
Alfalf says:
“I don’t think I’d go near Oil or Commodities right now.”
So……how do you feel about real estate?
Be honest. Forget your position financially, just how do you really feel about real estate at this time?
Well if I was a big Investor and if I believed that this was the bottom and that sales an values would begin to rise, I’d be buying Mobile Home Parks. They are cash cows as well as a great long term land hold. However, as a hedge against unforeseen calamity I would establish CME Furtures contracts based on Case/Shiller. That way if I had 1 $50,000 contract and the unexpected happened, when the contract hit the exercise price it could be worth $1,200,000. Any other questions?
Realtor Dave-
I think the reason the Fed is thinking sales haven’t bottomed is that they may be factoring out the REO’s in the sales numbers. If you take REO noise out, sales are far from bottoming.
The fact that sales are up from Dec or Jan is part of seasonality. On a Y-O-Y basis, sales volume is still falling. Folks are really comparing apples to oranges when they try to compare Dec/Jan sales volumes with Mar/Apr sales volumes.
I’ve only been tracking sales and $ volumes since Dec 2004, and that’s what my monthly numbers are telling me.
If you take REO’s out of your sales numbers what do you see?
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