Feds Cut Rates!!!

Another Fed Day arrived and in a unanimous decision, the Federal Open Market Committee (FOMC) cut the Fed funds rate today by 50bps to 1.0% and also slashed their discount window rate by 50bps, taking it down to 1.25%. While this will help reduce rates on credit cards and car loans, long-term mortgage rates pushed higher.

The FOMC cited a clear slowdown in economic activity, business equipment spending, and industrial production as a primary reason for their decision. They also stated slowing foreign economic activity will dampen prospects for U.S. exports. As a result, the Fed expects 'inflation to moderate in coming quarters' but 'downside risks to growth remain.' This language leaves the door open for further rate cuts in the future if the Fed decides they are needed to keep the economy from falling into a severe, protracted recession.

As expected, the Fed's actions weakened the U.S. dollar and this in turn triggered a spike in oil (+$6/barrel) and gold (+$13/oz) prices. The stock market also experienced some severe volatility as nice gains in the Dow and S&P 500 suddenly became losses during the last 15 minutes of trading when short-term traders sold to take profits following yesterday's sharp rally.

Its 2008, but What's Up with Tucson Sellers Stuck in 2005?

What's up with Tucson sellers thinking its 2005? Don't they realize that the speculators left a long time ago? The answer is... NO. Many Tucson sellers truely believe that they KNOW they will get THEIR asking price. Unfortunately for them, they missed the boat by a few years.

We are in a BUYERS MARKET. This means that sellers do not have the upper hand. Buyer do. Buyers have the power in this type of market. Buyers dictate what homes are worth, not sellers. Sellers need to realize that they are not serious about selling their home simply by listing their homes with an agent. Serious sellers, the ones who really do have the desire and motivation to move, are the ones who price their homes according to the market, area, and condition... the ones who do not put stipulations on showing times and make it difficult to show the home... the ones who have their homes in primo condition and have furniture removed or added to stage the home properly... the ones who put in new rock in the front & backyards or add additional landscaping, are the ones who are selling in 30 days or less. Those are the REAL SELLERS. It isn't by chance or luck that someone happened to find those homes... its because agents and their clients know real sellers vs. unrealistic sellers.

Then, you have people whose homes are on the market who are, in their words, "testing the waters". What does this do to their home values? Simply stated, it lowers their values. Why you may be asking? Well, because when the market numbers are skewed and showing a high inventory (due to unrealistic and "testing the water" sellers), buyers see this and know that they can use this as a bargaining tool. So, as inventory goes up... average sales price falls. Its simple really.

For those sellers who are "testing the waters" or are unrealistic... get over it. You won't be selling your home that is worth $375,000 for $450,000. Seriously... you won't. And remember...

"VALUE IS DETERMINED BY WHAT A BUYER IS WILLING TO PAY"

A Personal Announcement...

John and I would like to share our happy news with you all. We are expecting a little girl due March 1, 2009. We are very excited and working very hard to begin saving for her college tuition!