Northwest Living | Bellingham Real Estate Market

  I listened into CNBC for a couple of hours today around the time of the Fed made their announcement.  I normally listen to the CNBC early in the morning before going into my office, but really wanted to get a good fix on what’s going to happen in 2007.  I’m glad I listened in; there were a lot of Economists, Homebuilder and Journalist weighing in on today’s decision by the fed.

The good news was that the fed decided to leave the rates alone today at 5.25%. The fed has left the rate alone since June 2006 and prior to that raised the rate 17 times in a row.  There are 11 board members that vote on rates and the vote came out 10-1.  CNBC asked a former fed governor why the one vote for a raise and he said that particular governor has voted yes for the past couple of times and probably wanted to be consistent.

The only change in the language that the fed used today was in reference to our industry.  The fed had said that “because of the substantial cooling in the housing market, they will leave rates alone at this time”.  The general consensus was that not only will the fed leave rates alone, they will probably lower rates .25 % by May and probably another .25% by the end of 2007.

With that said…it really all depends on the economic growth rate and what happens with inflation.  But for now the biggest worry with the Fed seems to be the housing market and what’s going on with it.  They realize that the housing sector is a big player in the overall market, so they want to watch what they do with rates.  Most analysis agreed today that inflation seems to be in check and in fact we might have a slight slowing of GDP in 2007.  The same analysts are saying the housing sector will slowly recover by the end of 2007.

My guess is that the fed rate will be at 4.75% by this time next year. And we should be in a normal market by 2008.  We need to work the inventory of new homes on the market down to a more comfortable rate before we really start to see a recovery.  Speaking of new homes, CNBC interviewed Robert Toll, CEO of Toll Brothers, one of the nation’s largest homebuilders.  Toll says, “Were dancing on the bottom”.  He also mentioned that in the market his company build in traffic has been up 20-30 percent and deposits on homes to purchase have slowly started to go up.

I think the main thing I’ve tried to do as a Realtor during the past 18 months, is not listen to the Negative Chatter. After 14 years in this business and another 12 years prior to that on the building side…one needs to be careful about listening to the negative talk or Negative Chatter. The bottom line is, people are always quicker to spread bad news, before good news.  The problem with listening to the negative people is that if you’re not paying attention on what’s really going on in the market, you can miss a buying opportunity!
I think right now is a great buying opportunity with interest rates at 6.11 percent, higher than normal inventories, winter time markets generally are better buying opportunities and of course were in a buyers market.