Bernanke punts on third down, why?

By Tim Hall | Wednesday, September 19, 2007, 08:32 PM

Fed Chairman Ben Bernanke made a surprise move yesterday by going for the larger 1/2 percent (50 basis point) rate cut on Federal Funds instead of the widely forecast 1/4 point. So, that’s good for housing, right? Sure. But it also is an acknowledgment that the housing economy, in large part, IS the economy.

Let’s face it, I am excited about the prospect that now home buyers can afford more home than they could two days ago. And I am excited for sellers that home buyers MAY feel better about buying NOW versus waiting for prices to go lower, BUT….

There is a downside here too. A rate cut of 1/4 point would still have created a positive effect on the market and, as a real estate agent, I am thrilled. But by moving a half point, it may send a signal that buying now could still be risky, and that prices may fall further ahead.

My friend, John K, who is a commercial banker, sent me an article today from cnnMoney that shows Dayton as being one of only a handful of communities showing a very small pullback in prices from 2006 to 2007 (around 3.5 percent), compared to over 100 other metropolitan markets where home prices have fallen as much as 20 percent! So, once again, we Daytonians didn’t see the run up in pricing but we aren’t seeing the plunge as well.

So why do I wish that Bernanke would have taken baby steps? It’s just because I feel that large rate cuts are in part responsible for IRRESPONSIBLE lending and RECKLESS borrowing in the first place. I hope that home buyers and sellers will begin to feel some relief as we witness the housing correction be born. It’s going to be a while, but we will see things begin to get back on track.

How can you benefit today from the announcement? Talk to your friends, family, co-workers. Tell them to carefully look at their home loan. If they can’t put their hands on the loan papers, have them call their lender. Can they refinance without a prepayment penalty? Do it! If they have a good payment history, chances are their current lender will want to keep them. And if their current lender won’t step up and fight for their business, shoot an email to me at blog@timhallteam.com. I know some outstanding local lenders who will treat them like GOLD!

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FED cuts rates, housing market reacts!

By Tim Hall | Monday, September 17, 2007, 03:12 PM

Okay, I admit the title is misleading. Considering that the Federal Reserve does not meet until tomorrow, this is a presumptuous post. However, consensus has it that the FED will lower the Fed Funds Rate by either 1/4 point or 1/2 point. I just wanted to go on record that I believe it will be 1/4 point. What’s the significance? Well, the last rate cut was January 3, 2001. That’s over 6 1/2 years ago. So that alone makes the cut significant. Further, the fact that our new FED Chairman Ben Bernanke was trying to rein in inflation but had to reverse course to prevent a recession, that’s a big story.

So is the rate cut good for the housing market, especially here in Dayton? Yes, without question. Will it impact our market? Again, yes, but it is more symbolic than practical. First of all, lenders have already priced in the cut, so whatever impact it has on the actual cost of a home loan is already at work. Secondly, we still have an 18 month supply of homes nationally, so it will take time, and, I think, multiple rate cuts to get things back in balance.

Have a different opinion? Think the FED will drop rates 1/2 point or not at all? Post your comment soon as all bets are off after tomorrow! The FED meets at 2:30 EST, I think. I will post more after the meeting.

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Welcome to the Greater Dayton Home Report

By Tim Hall | Monday, September 17, 2007, 02:44 PM

Welcome All! This is the first post for this blog. My name is Tim Hall. I am a licensed Ohio Real Estate Broker practicing in Springboro, Ohio. After 14 years in practice, I have been invited to host this blog for the Dayton Daily News readership and the general real estate population as well. It is my hope to provide sound, usable advice covering a range of topics. While it is a blog, it is my hope that you, the reader, will ask questions and post comments to make this an active, valuable benefit to our community. I look forward to your questions and will call it like I see it! So let’s get started……

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