The Fed’s Next Move
April 28th, 2008 by Harvey ShapiroThe Board of Governors of the US Federal Reserve will meet tomorrow and Wednesday and the betting is that they will further reduce interest rates, but only by 25 basis points (.25%).
Fed watchers say they are more interested in the Fed discussions than what happens with rates. They want to know how the Fed sees the US economy and get a clue to future rate changes, but it’s pretty clear that current thinking is that we’re nearing the end of the Fed rate cutting program.
There needs to be a discussion of the US dollar in light of the beating its been taking. Except for some minor fluctuations last week, the dollar has been consistently losing ground to all major currencies over the past few years. This translates into more expensive imports, including oil, and higher cost international travel. On the other hand, the weakness in the dollar could add demand for exports from the US and, hopefully, will promote more investment from overseas.
Because of the weakening dollar, it’s important to realize that Honolulu properties are inexpensive when compared to real estate in parts of the Mainland and in foreign countries, especially in Europe and Japan. This contrasts with the sticker shock that visitors had when comparing O`ahu housing prices to those back home as recently as the mid-90’s. Honolulu prices were the highest in the US and were $100k higher than the second place city, San Francisco. Now, we’re fourth or fifth from the top.
What do you think the future holds for interest rates and the economy?
May 9th, 2008 at 7:09 am
Many of our clients are waiting to purchase because they think the prices of homes will go lower in the future. Our listings that are priced right have offers within days and sometimes weeks. If the listing is overpriced, the listing will sit until the price comes down and there will be increased activity. The buyers are having a harder time qualifying for a loan but the interest rates are very attractive for those that can qualify for a loan. I personally believe that unless there is a major catastrophe on the mainland or the world that Hawaii prices will not see the big drop in prices that has occurred on the mainland. The interest rates are very good for buyers and should stay that way until the economy improves. Remember that low rates and high prices equal to about the same payments as high rates and low prices. If you wait for the prices to go down, the interest rates may go up and you pay the same monthly payments. If you can make the payments, it is a good time to buy and sellers are making more concessions than before.
It would be wise for anyone who owns real estate or who wants to buy or sell to be as educated in real estate and make wise decisions. Take the prelicensing school and take continuing education classes that are offered to real estate agents and be knowledgable and learn how to buy and sell real estate. Anyone can take the classes and you do not have to get a license to attend. There are wonderful teachers in real estate who can educate the public to be wise consumers. Go to the real estate commission website http://www.hawaii.gov/hirec and click on Real Estate Licensing and Education and you can see a list of schools and classes that are being taught. You do not have to be licensed to take the classes. The schools will gladly take your money and teach you even if you are not licensed.