Market Update

Filed in Market Information by on September 10, 2011 0 Comments

This has not been an easy month for our economy. There was plenty of bad news about unemployment and the housing market in the media and the President and the Fed continue to try new ideas to dig us out of this rut. The Fed meets again in two weeks and early indications are that they will want to try additional tactics to lower interest rates. Here is a news flash. Lower interest rates won’t help the housing market!! We already have rates in the 3 to 4 percent range. What more can a lower rate really do? What they should focus on in allowing the people that have not received loans in the last few years actually go out and borrower money. The only way to do that is loosen guidelines.

One factor that might end up with tightening guidelines is the lawsuit filed by the Federal Housing Finance Agency (FHFA) against 17 major banks. The funny thing is the government is suing the same companies it just bailed out. The lawsuit is an attempt to help Fannie and Freddie recoup losses on, what they call, fraudulent loans. The bank’s augment is that there were unforeseen market conditions that caused the losses and there was nothing misleading about the loans. Both sides seem to have a good augment so I guess they will either settle or let a judge decide. The reason I bring this up is because if FHFA is successful I would expect to see higher fees and more importantly tighter guidelines to mitigate losses and potential lawsuits in the future.

I am very proud of our President for the effort to fix our economy with his Jobs Plan that he announced on Thursday. With a $447 billion dollar price tag there are obvious holes but it is a great step in the right direction. He is really pushing tax cuts for businesses (which will actually accomplish the goal of creating jobs) and a tax cut for the middle class (which will win him votes and maybe pump more money into the economy). The piece of his plan I don’t agree with is a large amount of spending on infrastructure. The last thing we need as is more government spending and most Republicans agree so there will certainly be some changes to his initial plan before Congress passes his bill.

I like the idea of tax cuts, especially for business, because that should help create jobs and will get more people paying taxes and ultimately produce more revenue for the government.

On the local front, Denver continues to do well. Months of inventory is simply how many months it would take to sell everything on the market if there were no new listings. Six months of inventory is considered a normal market and nationally there are 9.5 months of inventory. Denver and the surrounding areas have only 4.8 meaning it is actually a seller’s market and properties actually do sell. You don’t hear that in the news. This data is courtesy of the most recent Your Castle Real Estate Newsletter.

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