Real Estate Focus
By Lisa O'Neill, SMAMS Treasurer

The upset in the economy due to the subprime market crash is taking its toll.   Economists seem to think that while we will not see great growth in the next year, other areas of the economy should stave off a full-blown recession.  But when we consider that the housing sector makes up two thirds of the economy, we will just have to wait and see how much more it could possibly affect the outcome. As far as the housing market goes, we will probably not see a correction for the better part of a year if not longer.   

After much consideration, Federal Reserve Bank Chairman Ben Bernanke lowered the federal funds rate to pump some liquidity into the banking system, helping banks to keep funding their mortgage pipelines. 

The federal funds rate is a good indicator of where other interest rates will go.A decrease here should trickle down to mortgage rates - but by how much we don't know.  This should help a little with the purchasing power of potential homebuyers in the market, as many were squeezed out due to the tightening of underwriting guidelines in response to the foreclosure crisis.  Also, it could allow homeowners with an adjustable rate mortgage to refinance and lock in to a low fixed rate mortgage.

There is talk of proposed bills to help ease the financial crisis being felt by many homeowners.  We will have to wait and see what gets passed and what the Fed's next move will be.   The committee meets again on October 30^th.
Stay tuned!