Tuesday, September 18, 2007

Rates DOWN. Confidence UP.

Jeff Brown wrote a brilliant piece on Bloodhoundblog yesterday. Read it all - and the comments as well. This kind of thinking is the reason I read blogs, especially BHB. Key graphs:

I can’t find a two week period in the last 40 years where the Fed has increased money supply by over $110Billion — can’t find it. That doesn’t mean it hasn’t happened, but you have to agree, that’s a monster increase in our money supply. (That’s M2 for the econo-nerds.)

This move will, (I theorize) spur the stock market — and please believe me, I don’t say this lightly — to heights we haven’t dreamed of. That kind of added liquidity in this set of circumstances relegates whatever Bernanke chooses to do with interest rates tomorrow — anticlimactic. The only argument that makes rate cuts more likely than not, is the absolute requirement of — confidence.

Confidence? No kidding: DOW up 336, 2.51%. Investors were tickled to death with the half point cut in the federal funds and discount rates. Sure, one day does not a rally make, but the drop in the DOW a few weeks ago when the sub-prime problems were fully felt foretold nothing but gloom, so I’m going to exercise prerogative and give tickled where tickled is due.

What’s this mean for the housing market, particularly the housing market in the Pacific Northwest? It should help ease the coming interest resets for adjustable rate mortgages. Whether or not it will affect mortgage interest rates is questionable; there’s no direct correlation. That said, the thirty year fixed dipped below 6% for a time last week, and jumbo mortgages (+$417k) are starting to settle.

As I’ve argued before the fundamentals remain strong.

So what’s the real effect? Perhaps, as for the stock market, this is a catalyst for the one thing this housing market has lacked:


Monday, September 17, 2007

'Green, Green' Redux

Back in March I wrote this about the then new ‘green’ search filter on the MLS. Dylan Rivera of The Oregonian had written an extensive – and breathless – piece about its rollout: “Environmentally friendly information for Realtors signals good news for some buyers and sellers and starts a trend.” was the subhead.

Since our MLS is one of the few in the country to have the filter, here, for the benefit of those around the country considering the add-on, are the six month numbers from one of the greenest cities in the US:

Total active listings, Portland Metro: 16,108.
Total listings labeled ‘green’: 451
Or 2.8% of the total, where it’s been for the last four months.

But what about buyers? Only new construction is available for a green cert, and builders may, in this market, be reluctant to add the cost if that cost can’t be recovered. If the incentive is meaningful certified properties should sell at a higher rate:

Total sales, last six months: 16,016.
Total green sales: 296, or 1.9% of the total.

Apparently not a trend quite yet…