Fed Cuts Discount Rate, Markets Rejoice
Everyone knew the Fed was considering cutting rates, but its half-point shave of the discount rate before markets opened this morning surprised investors, who responded by driving up the Dow 300 points. According to The Times, the move increases the possiblity that the Fed Funds rate could be cut before the next scheduled meeting on…
Everyone knew the Fed was considering cutting rates, but its half-point shave of the discount rate before markets opened this morning surprised investors, who responded by driving up the Dow 300 points. According to The Times, the move increases the possiblity that the Fed Funds rate could be cut before the next scheduled meeting on September 18, something that could have big implications for the housing market. For now, though, the question is what, if any, psychological impact this cut will have on the real estate market, here and around the country.
In Surprise Move, Fed Cuts Key Rate [NY TImes]
9:54 – you do not understand the NY real estate market – your ownership experience appears to be limited to out of state and some text book jargon. Buy and sell four prime residences in NY city and then come back to this forum and let’s talk.
BTW – NY market will suffer some setbacks in this current environment, but it will never ever be “kaput”! Not ever!
me thinks this me thinks thing is weird.
Me thinks anyone who thinks real estate is sure bet in the next five years knows nothing about real estate or finance.
And probably has little understanding of history.
me thinks you don’t know a darn thing about real estate, 9:54.
not one thing.
BrooklynCouch,
Me thinks you still don’t understand business cycles. For the past 30 years, the credit markets have been expanding while real savings has decreased. During the next cycle, the opposite will occur.
As a result, housing as part of the economy will contract back to its “normal” level and may actually dip below the mean for a time. As part of the that contraction, housing prices will decrease or at least fail to keep up with inflation.
When individuals no longer look at housing as a means for wealth creation (housing does not add anything to productivity and manufacturing growth) that will be the time to invest again.
As for investing in real estate, I haven’t owned since moving to New York one year ago. Before that I bought and sold four residence over a period of 6 years. The frenzy in the real estate market was evident, and I personally thought it was time to get out. Besides, who knows how long I’ll actually be here.
Other bubbles will come and go. Perhaps infrastructure or alternative energy will be the next bubble, but housing is kaput.
hey 9:49 PM, me thinks you have never thought the time was right to invest; and if you did, it was not with much thought.
In most ways, the US economy is better than in was in the 1990’s; even the late 1990’s. There are no guarantees, but perpetual pessimist that eventually “proves right” is no better than not thinking at all.
Lots of folks misunderstand the real estate and financial markets.
First a real estate bubble starts in the urban areas, spreads next to the suburbs, and finally inflates the exurbs/rural areas near the bubble’s end. When the bubble finally deflates, the process reverses itself. The deflation will eventually hit Brooklyn and Manhattan if it hasn’t already.
In addition, a financial crisis is not an event but a process. Here’s a quote that sums it up nicely:
“A financial crash is not a sudden, singular event. The way the Crash of 1929 is commonly misunderstood, the market crashed on Monday, October 31, 1929 and soup lines formed Tuesday.
A financial crash is a process lasting as long as a year, punctuated by a few notable grip-and-grin market events that make it into the history books. Underlying the process is the dissolution of a fallacious belief system that developed over a period of many years. Fallacies floated on an ocean of cheap credit. As the credit dries up, facts are revealed under the harsh light of reality…”
iTulip.com 08/17/2007
Personally, I wouldn’t be buying any property in the area for several years. We may see big gains in the financial markets from time to time, but the downturn will eventually come and will have a long ways to go.
PS: Since when is 300 points in a 13,000 Dow a big deal? It was a big deal 15 or 20 years ago when it was a much greater percentage, but not, its a non-event.
8:27PM, ain’t gonna happen. Such would require (1) major recession (2) Manhattan residential prices to, basically, crash. (2) is even less likely to happen than (1).
Relax. The economy is more or less great, and short of a nuclear attack, is going to stay that way for years.