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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: John Chen who wrote (9526)	3/10/2003 10:00:20 PM
From: Jim McMannis	Respond to of 306849

yeah... Then what happens...taxpayer picks up the tab? <G>

To: John Chen who wrote (9526)	3/10/2003 11:39:27 PM
From: Mr. Sunshine	Respond to of 306849

<<"FNM...". Don't nobody short these gov sponsored business. Fed will drop rates to fight the inevitable until the needies/buddies are out and safe.>> Actually, the FED only controls SHORT TERM interest rates. Most FNM loans are fixed and based on LONG TERM interest rates, which are determined by the bond market (e.g. the price is determined when there are equal numbers of buyers and sellers at a given price). SHORT TERM and LONG TERM interest rates do not necessarily follow each other. In fact, low short term rates may lead to inflation which will make investors demand higher long term rates. IMO, thinking that the FED will keep short term interest rates low in order to prop up the housing market is bunk. The FED is keeping short term interest rates low because 1) the economy stinks and 2) inflation is tame. The FED does not buy houses, people do. And the number of people who want to buy a home in a given area drives the cost of housing. It is called supply and demand. <<Also, 'forclosures' are signs of higher RE prices to come.>> Huh? Foreclosures usually happen in a falling RE market. If the market is rising, most home owners will sell rather than let it go into foreclosure. <<Basically, the Jane/Joe 6 pack, the make-believe temporary home owner(bag holder) CANNOT AFFORD to sell a house if it increase ONLY 5% annually. The RE pros, the experts, come and swoop it up for the dirt. They hold to the market price (with Gov sponsored cheap liquity) and sell it to the next make-belive home-owner, hold the mortgate until next job from out-of-town. This cycle continues and the prices keep spiral higher, higher, ... higher. The FED sees no bubble, hear no bubble, actually bubble implies success of the FED. At least that is the story being put out in the front.>> This whole paragraph is inane paranoia nonsense. I was going to break it down sentence by sentence, but it is not worth the time.