So the Federal Reserve cut interest rates this week, big deal.
Posted Sep 22, 2007 @ 10:42 pm, Viewed by 389 Visitors, Read 396 Times..jpg)
The Federal Reserve cut interest rates this week. Does this help to solve the problems in the national real estate markets. Not really, first off there is no such thing as national real estate markets. There is barley such a thing as a New Jersey real estate market.
Back the what the Fed did, they cut interest rates half a point this week. This is a step in the right direction, but by far is not the solution to the problem. Here in Morris County, Union County, & Essex County New Jersey almost every home buyer needs to borrow more than $417,000 to purchase a home. The type of loan home buyers need to get here is New Jersey is what is called a non conforming loan. These are loans that are not insured by Friedy Mac or Fannie Mae. Currently if you get one of these non conforming mortgages you will pay as much as a full mortgage point higher than someone with the same credit score borrowing $417,000 or less. That is just not fair, and it reduces many peoples buying power.
The other issue, is that at the lower end of the market, as many as 50% of the home buyers in recent years have needed to get a sub-prime loan. So now half of the home buyers in the lower end of the market are completely out of the game. Add to that the number of home buyers who are scared by the news media's over hyped claims of doom and gloom and things start to get more than a little difficult all the way up the food chain in the real estate industry.
So what is happening in places like Morris County, or Union County, or Essex County New Jersey? It just depends, for the towns along the Midtown Direct train line the real estate market has been fairly stable. For some of the less desirable towns, the market has been very slow.
Thank you for reading,
.jpg)
Rate this Post!
Share this Post
Print
Social Bookmarking1 Responses to “So the Federal Reserve cut interest rates this week, big deal.”
REW Blogs User Stats
Currently Online Users:
1
Total Users:
1,741
Entries:
5,147
Unique Views:
2,558,892
Total Views:
2,652,293
Total Comments:
5,150
James Boyer, is a resident of Morris Township in Morris County New Jersey and Specializes in listing and selling homes in Morristown, Morris Township, Madison, Florham Park, Chatham, Summit, Short Hills, Millburn, Maplewood, & South Orange New Jersey and Morris Essex & Union County Real Estate. Read More
View My Listings
Contact Me
RSS Feed- This User's Stats
-
Blog Entries: 170Average Blog Rating: 0Unique Views: 80,208Total Views: 84,606Comments Posted: 203Comments Received: 172
- Friends
-
Top Rated
REW Blogs RSS Feed
I heard the Feds action best described as "pushing on a string". The current problem was created by Greenspans ultralow rates which allowed a lot of people to do things they should not do. Reducing rates now just buys time for the Wall Street guys to sort things out and find where the garbage is they sold. The drying up of liquidity was caused by the junk contaminating the whole. If you had one toxic tomato run through a ketchup factory, it would be difficult to sell ketchup until consumers were confident that the toxic product was recalled and no longer in the system. That does not happen over night so ketchup sales plummet. That is what we are seeing in the credit markets and the reason that the "pushing on a string" term is used. You can try to give away contaminated ketchup, but you will have no takers even though there is only a small percentage that is toxic. The same holds true for the buyers of mortgages and commercial paper, they just aren't interested in taking the risk that the product could be toxic. Time will sort this out and then the next crisis will appear in some other market where greed by all parties cause markets to attain unrealistically high or low extremes.