Predictions for Tues

Anyone one want to step up and go on the record as to what the Fed is going to do to the Prime Rate on 9/18/07?

Also what effect will this have on the National Real Estate Market?


1/4 point drop. And absolutley no effect what so ever on the housing market.
Why??? Because when you owe $300,000 on a house that is now worth $225,000 the interest rate can be zero and your still upside down. (The fed rate is a short term rate anyway and has nothing to do with longer term paper)

This fall out has a long way to go. Remember, a housing correction is like a balloon slowly deflating. Prices don’t just crash. Your neighbor HAS to sell his house because he lost his job, he lowers his price to make it move. He just lowered the price on everyone else’s home in that neighborhood. And it goes on and on.

Did you guy’s see the jobs report last week? They were expecting an INCREASE of 114,000 jobs (an increase) and instead got a loss of 4000. Some economist some where blew that call. BIG TIME!

I don’t know about other people here but I can tell you this. Housing is THE BIGGEST engine in our economy. When it stops firing on all cylinders it’s just a matter of time before it reverberates through the rest of the economy. Car sales suck (directly related to home sales), housing inventory is up, prices down (in most areas) and now we’re seeing increases in jobless claims. Well DUH?? Did they think it REALLY wouldn’t trickle down?? Additionally, people who build homes are very well paid. Skilled carpenters, masons, plumbers, electricians, these guys make REAL money. It’s not like Walmart where everyone but a handfull are making $8/hr. You pull the plug on that and just watch. It’s just started.
I’ve been in the building business for 20+ years. You should hear what these guys are saying. NOTHING on thebooks for spring. NOTHING. And I’m talking about guy’s who’ve been booked SOLID for 6 years.

Bottom line the FED missed the boat on this years ago. If they had started their 1/4 point increases when the fuse got lit on this bomb they may have slowed it. Instead Greenspan actually recommended that poeple use ARM products to buy homes!!! Now he’s got a book coming out blaming everyone but himself.

I don’t know, but I think we’re all in for some real pain here in the next few years. I do believe however that it will be a GREAT time to buy and hold real estate. These things happen over and over, there’s not a thing we can do except exploit the market by buying what other people are giving away.

25 basis points - is what I predict. And very little impact on the RE market - not until they finish cutting 100 points over the next year.

Great post Fdjake!

You sure you don’t work for the government? lol

I would say the most important part of tomorrow is going to be the comments and notes regardless of what they do.

I and many others look at the guidance that goes along with their actions
as that to me is far more important.

Got a nice little economic tip yesterday from a friend of mine who’s been in the restaurant business for 40 years. We were taking about the economic outlook and he mentioned that his credit card business was up to 75% of his gross receipts. I said… Is that good? His answer?

The last time he saw his gross receipts go up to 75% for credit cards was in 1990!
We all know how WONDERFUL the ecomony was back then. He also said that this indicator has been very reliable over a very long period of time. “You know you have a recession coming when people have to buy a meal at 22% interest.” he said.

I asked him why he thought that stat. mattered. His answer was very interesting. He said when people are starting to feel the pinch one of the things they do is use credit cards for what they would usually pay for with cash. People he said, don’t like to change their lifestyles, so inorder to keep what they can’t have they break out the plastic. It does make sense if you think about it. I know lot’s of constuction company owners who 2 years ago were walking around with $3000 on them at any one time. Not any more. These guy’s aren’t stupid, if they are. their not around long. The guy’s I know are getting ready for a storm.

Want to see another GREAT economic indicator the boy’s from Harvard never even look at. Pick up an issue of AUTO TRADER, but get the one with heavy equipment in it. You know backhoes, excavators. It looks like people in that business are selling everything they have right now.
I pick those ads up all the time. They’ve literally doubled in size in the last 8 months. That tells me a lot. 2 years ago these same guys were buying ANYTHING they could get their hands on. A friend of mine actually had to get the ads BEFORE they came out a few years ago because everything he called on was sold the day it came on the market. Not now.

If the FED wanted to do the RIGHT thing, they would hold the line. However, they will cut a quarter point and hint of additional cuts, all the while saying that the global economy is strong.


I’m gonna stick my neck out and say that they will cut the rate by 1/2% and that it will boost the Dow by 200+ points.



Fed Lowers Rate to 4.75 Percent, First Cut Since 2003

Woo Hoo…do I get a “crystal ball” award for that one, or what?



1/2 eh? I didn’t think they would do anything over 1/4. Panic must be setting in.

Yup…and the Dow is up 252 and climbing.


No body likes a “bragger” Keith, but ya you nailed it… :cool

Now housing prices should stop falling accross the USA…

My guess we are near the bottom and next spring 2% to 3% normal appreciation again…


          [b]  NOW NOW NOW[/b]

Anyone else wanna chime in?

Well, in all honety, it WAS right after the Fed announcement!


Now housing prices should stop falling accross the USA...

My guess we are near the bottom and next spring 2% to 3% normal appreciation again…

The Fed lowering interest rates won’t stop prices from falling. Falling prices are the result of excess inventory (too much supply, too little demand). Foreclosures are increasing and the inventory will continue to increase.

However, I do agree with you that now and for the next few years - we have a great buying opportunity.


:rolleyes Now the truth Rears its ugly head! :biggrin