We had another eventful day in the financial markets today:
- The Dow shed 449 points (4.1%) to close at 10610 amid fears the credit crisis will claim more victims
- Interest rates....The 2-year treasury bill closed at 1.64%, the 5-year treasury note 2.52%, and the 10-year treasury bond gained 14/32s to yield 3.41%
- Rumors about Morgan Stanley and WaMu's fate abounded, apparently WaMu has hired Goldman Sachs to find a buyer
- Financials fell after the Reserve Primary Fund, the oldest U.S. money-market fund, became the first in 14 years to go below $1 per share, after writing off $785 million of debt issued by Lehman. Investor redemptions will be delayed as long as seven days, with the fund trading at .97 cents
- Housing starts fell to lowest level since 1991 as they fell 6.2% in August
The good news here is that we need less housing inventory on the books and the conventional wisdom has it that when housing starts are way down and housing prices are falling, we've hit bottom.
Problem with conventional wisdom is that we've never been through anything quite like this downturn before. Interest rates are low, which is great, but money is very tight, which will make the recovery take longer. Another bit of good news is that there are so many foreign interests involved with the US financial system that there's alot of motivation to get it back in working order.
We'll have to sit tight and see how this whole thing unravels, but also on the good news front, if it does so quickly then maybe we can begin the clean up process and build a better system.......yes, I really am a glass is half full person.
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In a word...NO
Ana,
I hate to say it but the bottom appears to not be close yet, in Southern California I am seeing an increase in NOD's and NOS's as the second wave comes through. As the homes fail so will more banks and insurance companies. Maybe it will be better in 2010.
Take care!
RJH
Hi Ana, Great informative post. Do you really think we are going to see a smaller inventory? In my area the number of REOs have increased monthly. All these short sales that don't close have to come back on the market at a lower price and as REOs.
Ana:
The challenge is how to keep buyers from running scared and how do you as an agent, let them know that real estate is a great investment without being to aggressive. I had two buyers today call and say that they would rather rent for a while, instead of finding a home with the uncertainty in this market, and no matter what I said they are convinced that we are headed for even tougher times.
Would like to think we hit the bottom, but don't think so! We heard last week in NJ that we did, but this market is new to all of us. We have so many foreclosures....trying to stay positive and focused, but we are dealing with people who are hurting, it gets frustrating.....
Empire, Mana.....I would agree with you in that I'm also seeing an increase in REO and NOD properties, so I personally think we'll be in this type of market for some time....6-12 months on the glass is half full side of things.
Lorraine....I had a buyer say that to me as well. I think at this point we can reassure all we can, but we can't control what's going on around us. funny thing is that you are supposed to buy when things are down, but that's also when it's the scariest!
Thanks for stopping by everyone!
All I can say is, I certainly hope it is the bottom. But I also think it will be slow recovery, when everyone will be wanting fast recovery, just don't think that will happen, but it would be nice!!
I think it is hard to tell. When bad news starts it tends to pile up for awhile.
We are still falling. I don't know when we will hit bottom, but I believe it will be within the next month as we simply cannot fall much farther.