As of now, the Dow is only down 77, after opening the day down over 400. From where we were to start the day to now seems like a rally to me.

But of course, I think the Fed should ease up on rate cuts for fear of inflation worries. We are at the end of the cycle, just as we were in 2000. It’s not the end of the world. Rather than have the Fed micromanage things and Congress and the President offer a fiscal stimulus, the best thing is to do nothing. It’ll pass. I can probably understand this rate cut, but a fiscal stimulus and further rate cuts are not a good idea, that is unless inflation is shown to be absolutely no factor at all.

As for the housing market, it is actually a great time for HUD qualifiers and first time buyers. Those types of loans are still easy to get and you also get the really low rate, which is bound to fall even lower after this cut in the Fed funds rate. So if you rent, regardless of what they are telling you, you need to buy before prices start to go back up.

Well, I’m waiting to be convinced this is a good idea. I’m no economist, but it seems to me that we have had alot of cheap money available for too long. I think that well is close to empty. Everyone that could have refinanced, already did. No one is going to pull more spending cash from their equity in these uncertain times. As for helping the housing market, until real estate starts to reflect actual value, instead of appraised value, I don’t think the mortgages over 300 thousand are suddenly going to take off. Mortgages of 250 and below are still moving quite well, according to what i read. So, unless this rate cut is going to spur another long term orgy of business investment, i don’t think i applaud the move.

Feel free to educate me as well.

My company had its fourth best year ever… Rutherford County was up about 6.5% in home values. If you have a home to sell under $175,000′ish, it should still sell! Over $200,000 is a bit more challenging.

I was hoping you guys would show up. I’m taking notes.

Right, Kathy, and that 175 figure just nudges up a bit, well 75 k or so outside of Tennessee. Thats my point. I think those houses would move with or without the rate cut.

I think you are on the right track Mack. We can’t keep dumping money into this economy. Eventually that money will be devalued with inflation. The dollar is already in trouble. Bernanke is in a tough situation here, no doubt. But I think he needs to exhibit more leadership and less consensus pleasing. I am speaking in general terms though. As for this particular cut, I can’t blame him too much.

Your right. It is a difficult time right now for people selling high dollar homes. But that was always a risky market anyway. I closed a deal last month on a home that was once listed for 415,000. My client got it for 339,000. They were happy as hell btw.

But even those deals are few and far between. The best place to be, like I said is attracting first time buyers. What is happening now, in regards to rate cuts, is a good thing for people that don’t own.

It’s stagflation all over agaon. Whatever is done to stimulate the stagnant economy will also boost inflation to some degree. The economy is, to a much greated degree than economists have considered in the past, driven by perceptions more than real data. There are days whe stock market analysts have a hard time pinning what caused an uptick or downturn in the Dow because it was a change in perceptions. All economics is to some degree voodoo.

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If I was a new buyer and had good credit, I’d be running to buy a home right now. The APR is now in the 5’s(depending on the lender) and with an active buyers’ market, sellers are more willing to work with you. It will all stabilize - I’m optimistic thinking in about 4 to 6 months.

To follow up on Glen’s comment, there are less and less first time home buyers after years of low interest rates and easy to get mortgages (with little to no down payment and net worth). Now almost everyone who could pretend to afford a home owns one and loans are getting harder to be approved for. Even as house prices drop, I don’t think we will see first time home buyers propping up the market on a national level. On a local level we just have to count on the population to keep rising.

Now, what scares the shit out of me is the thousands of condos that will come on to the Nashville market in 2008. So many urban condo high rises are being built at the same time. What will happen with the increase in inventory. There was a piece in last Sunday’s Tennessean and I meant to write about, but I haven’t gotten around to it yet.

There are still houses under $175,000 that are overpriced, and they aren’t moving, either. One on my block (first listed at $120,000, now at $116,000, probably will sell eventually for $105,000) has been sitting empty for several months now, because the neighborhood as a whole went way overpriced and the owner wants his overpriced share. Not gonna happen any more, though.

If I was a new buyer and had good credit, I’d be running to buy a home right now.
Or even better…CASH.

I feel the same way about the stock market. Why should I care if the value of my 401k drops a few percentage points? I’m buying, not selling! That just means deep discounts!

I’d like to see everyone, especially the fed, just chill.

Free markets have a way of sorting problems out fairly quickly. Gov’ments have a way of patching problems just enough to pass them off onto whoever gets elected in the next cycle.

It’s been happening since The New Deal.

Announcing an out-of-schedule cut today before the stock market opened shows that the Fed’s motivation is to calm the markets. It really takes six months for a Fed action to make it out into the real world. Next week at their regular meeting, when they probably drop rates another quarter point (my guess), they will have used up most of their bullets. When you have fiscal deficits and trade deficits, the U.S. owes other countries money. If the government decides to borrow another $100 Million or so, you should expect the foreign markets to get more nervous. The Fed can’t save an economy. It just jiggles interest rates.