Rate cut will not affect housing markets much (Austin, Cedar Park: sale, real estate)

[pdxtech]

Fed cut could buoy housing markets - Yahoo! Real Estate (http://promo.realestate.yahoo.com/fed_cut_could_buoy_housing_markets.html - broken link)

It seems that the rate cut was already priced into the mortgage rates, which
means if you were looking at buying a home, you will not see much of a
reduction in your monthly payments if you wanted to take out a loan
less than $417,000. Jumbo loans will come down a little bit, but those
are for properties where they will require better credit, more down payment
now, because that is where the sub-prime crisis hit the hardest.

Looks like the home sale decline is here to stay in Austin. Comments?

[Torontonian]

"This is Why I Rent - A Median Incomes Do Not Support Median Home Prices"

This is Why I Rent: Median Incomes Do Not Support Median Home Prices | eFinanceDirectory.com

PS. Another foreclosure listing in Cedar Park (78613) today which catched my eye...

[llkltk]

I don't think you are right. I read that it will be good for loans under 417k. I talked to my mortgage broker and he said that rates will come down in the long term slightly. Not sure what you have to back up your info. Plus, Austin is not in decline, some areas are still hot right now. I wouldn't expect prices to dip at all.

[austin-steve]

Rent vs. Buy is a completely personal decision. There can be no "right" or "wrong" answer to the question, in a general sense. Many factors go into determining whether it makes since or not.

It's like trying to declare "I don't drive a truck", and then explaining why nobody should drive a truck. The explanation would be meaningless because it's a personal decision based on personal needs and circumstances.

Steve

[pwherman512]

Good call austin-steve. While I think it is crazy to rent, one of my buddies refuses to buy. To each his/her own.

[Torontonian]

Originally Posted by llkltk

I don't think you are right. I read that it will be good for loans under 417k. I talked to my mortgage broker and he said that rates will come down in the long term slightly. Not sure what you have to back up your info.

30 yr fixed mortgage rates usually follow the direction of the 10-YEAR TREASURY NOTE. Interest and bond price are going in the opposite direction. Foreign investors are backing off due to rapid devaluation of US dollar, rates are going up

^TNX: Summary for 10-YEAR TREASURY NOTE - Yahoo! Finance

[pdxtech]

As far as rent vs buy goes, it is a personal decision and one size
never fits all. However, I think the philosophy with the current market should
be- Rent now, so you can buy better just a little later.

Here's why I think so, specifically for Austin-

- We will see another rate cut, it seems that the Fed is really concerned
about the economy dropping into recession. Our monetary policy has
historically been such that the interest rate trends continue for a while.
There were 17 interest rate hikes leading to where we are at. There will
be a few more cuts till the economy stabilizes. So, if you can afford to
wait a bit, you will get a better interest rate.

- I agree with Torontonian that the dollar is rapidly falling. Today, for the
first time, 1 Canadian dollar was equal to 1 USD. What this means is that
our imports (including oil) will get more expensive, the cost of doing
business will rise and we could see many more commodity price increases.
This will again affect how much people can afford. Austin is not an
island. It is a "heads in the sand" approach to say that our economy
will not be affected. Let us say that if prices go up, during Christmas
season, more people will choose a cheaper consumer gadget to gift.
Do you know what that will do to companies such as Dell?

- The rate cut was made to inject liquidity in the market. In plain speak
that means banks just don't have enough money to loan out so
you and I can buy our homes. Rate cuts typically depreciate the dollar
by injecting more cash in the system. This means that people who hold
our foreign debt (Chinese, Japanese, British) start dumping it in
the international market. Read this story:
Is China quietly dumping US Treasuries? - Telegraph
A lot of the business output of Austin is subject to international
trade and currencies. If it gets more expensive to manufacture
anything we make abroad, it will affect our margins.

So, not to sound gloomy or anything, one has to remember that real
estate is an integral part of the economy, and the Austin economy
is not generally independent of the global financial dynamics. The market
has seen a good amount of boom in the last few years, typically,
these are followed by a period of bust. It's my wish that in Austin,
the bust is just a minor correction.

[Torontonian]

llkltk, here's the quote from the mortgage brokers forum:

Posted - 09/20/2007 : 2:27:55 PM
--------------------------------------------------------------------------------

And we just had another change for the worse today. That is 3 increases in 1 day!! Freaking crazy!

This is ridiculous. (http://forum.brokeroutpost.com/loans/forum/2/167167.htm - broken link)

[pdxtech]

Here's what Alan Greenspan thinks about the housing market:
House prices to drop much lower: Greenspan: Financial News - Yahoo! Finance (broken link)

I would appreciate some feedback, do you think the Austin market has
anything different from the rest of the economy to bounce back early?

[hello13685]

Short term rates go down, and long term 30-year fixed rate mortgage rates go up. Of course your realtor or broker is going to tell you whatever they have to in order to get you to seal a deal. Duh...