Ben Bernanke Spoils the Urgency Argument for Home Sellers

Reblogger Lenn Harley
Real Estate Agent with Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate 303829;0225082372

JOHN GIVES THE FED TOO MUCH CREDIT.

I'm not so sure that prospective home buyers determine their buying schedules by the action or inaction of the Board of Governors of the Federal Reserve and what Chm. Bernanke says.

I suspect that their buying motivations are job transfers, family needs, don't want to rent, move for family, move for schools,  and their personal budget which takes a hit each time they buy a gallon of milk.  etc.

Real estate market is fueled by consumer need and ability.

Real estate market is slowed when folks are scared to death that the country is going to Hell in a hand basket.

Grocery Shopping

 

Well, after buying groceries this week I believe we should cancel our home buying tour this weekend.

Original content by John Mulkey

woman thinkingJust when you think the housing market can’t get more difficult, Ben Bernanke spoils the urgency argument for home sellers. The Fed’s recent commitment to maintain historically low interest rates for the next two years has erased hope for many who were waiting for buyers to purchase due to concerns over the potential for rising rates. Additionally, concern over falling home prices has many buyers confident that playing the waiting game is to their advantage. And with conditions as they are, it’s hard to disagree. 

 

Overall, this is not good news for sellers—and not good news for the rest of us either—but it appears that “fence-sitters” can relax in the knowledge that super-low interest rates aren’t going away in the foreseeable future. In fact, rates could get even better, with some predictions that we might soon see rates for 30-year fixed loans in the 3’s.

 

What this tells us is that the Fed is very much aware of the weakness in the economy and the significant potential for another recession. (It’s my opinion that we’re already entering that the second recession.) With the economy continuing to weaken—increasing job losses, stagnate or declining wages and consumer confidence virtually erased—the future of the housing market in many areas remains bleak. Yet while the Fed’s actions were intended to aid the economy, the end result for housing will likely be additional slowing of the market.   

 
 

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Rainmaker
680,225
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

Hi Lenn - What the Fed did was allow renters to relax too much.   They are under the illusion that the longer they wait the sweeter the deal will get.  This is the poison that deflation delivers.  People postpone purchases that they really should be making now thinking that they what they are about to purchase will get more and more affordable.  Several buyers of mine last year pulled the trigger because interest rates were LOW.  Now they feel no urgency whatsoever.  This is causing first time buyers - the people we need the most - to stay on the sidelines.

This could be a red herring.  The fed can try to hold rates down, but right now investments in companies like P&G with a good return and stable floor under them are getting more attractive than treasuries.  So although rates will be held down - the question remains how much.

 

August 23, 2011 01:19 PM #1
Rainmaker
591,494
Laura Giannotta
Keller Williams Realty - Atlantic Shore - Little Egg Harbor, NJ
Your Realtor Down the Shore!

Lenn I agree the fuel is need and ability...but what happens when they (the feds) change the game???  Nobody wants to make a move, for fear they'll move too soon and the feds will come out with another hair brained scheme to 'encourage home ownership'.

August 23, 2011 01:42 PM #2
Rainmaker
212,390
Ellie Shorb
Coldwell Banker, Ellie@CBmove.com - Chevy Chase, MD
CRS, Realtor DC, MD & VA Luxury Home Expert

It is amazing... Just when you think the fed cannot do/say anything else to hurt growth.... Unreal, Lynn. I agree with your sentiments. I am seeing lots of fence sitters in one community in particular - so far, for them, it is working as prices continue to fall....

August 23, 2011 01:43 PM #3
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Ruthmarie.  I don't know but I'm hoping my Liber gets locked in for another year before the rates go up.

Laura.  You are so right.  Every time they announce that Bernanke, Obama, etc.

 

August 23, 2011 01:57 PM #4
Rainmaker
825,649
Nicholas Goglucci
South Florida Real Estate & Development, Inc. - Pompano Beach, FL
The Listing Whisperer

Congratulations - This post is now featured in Silent Majority Group of Active Rain!

August 23, 2011 08:30 PM #5
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Nicholas.  Thanks.  This was only a reblog, but made a point.

August 24, 2011 05:53 AM #6
Rainmaker
1,218,609
Jay Markanich
Jay Markanich Real Estate Inspections, LLC - Bristow, VA
Home Inspector - servicing all Northern Virginia

I felt it real time and didn't need a news report to tell me that July had stalled from the previous month.

August 24, 2011 07:12 AM #7
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Charlie Ragonesi
AllMountainRealty.com - Big Canoe, GA
Homes - Big Canoe, Jasper, North Georgia Pros

I guess there are winners and losers with any action the Fed takes. persoanlly I think it was a good decision and willlead more people into the home market. As they recover low rates will keep homes affordable. So the trick is to recover

August 24, 2011 01:55 PM #8
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Jay.  In my experience, real estate usually goes fairly dorment in August.  This is worse.

Charlie.  We'll see.  We'll see.

August 24, 2011 02:07 PM #9
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Lenn Harley

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