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Re: Local Real Estate Markets
Old 04-12-2007, 07:32 PM   #21
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Re: Local Real Estate Markets

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Originally Posted by al_bundy
do you have any idea how much these probabilities change? there was a 90% probability of a rate cut by the pro's for a long time now and it keeps getting postponed.
Those graphs tell you how much they change. For example, the probability of a June cut went up to 30% when the subprime mortgage mess caused so much concern last month. Each line represents the betting odds on a particular federal funds rate, so follow the "5%" line for the June meeting and you'll see what I mean.
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Re: Local Real Estate Markets
Old 04-12-2007, 07:51 PM   #22
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Re: Local Real Estate Markets

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Yep, pretty sure, although I would not care to bet on a specific date for the start of the cutting. The summer selling season is likely to be pretty crappy for RE, which will have a knock-on effect for the general economy. Plus it is suddenly a LOT harder to use one's home as an ATM machine. GDP growth estimates for the back half of the year are now in the low 2% range, which is well below "potential".

But what we really need is a sustained uptick in employment. That will take a good deal of inflationary pressure off the Fed. Plus we are heading into an election year, so the second half of 2007 is about the right time to start goosing up the economy again...
in 1980 Volcker raised rates to 14% in an election year and reagan hated him as well

Greenspan raised rates in the late 1980's and 1990's in election years. Bush sr still blames him for the recession that cost him the election

only time in the last 30 years that i can remember where the fed played nice for a president is 1994 - 1996 when greenspan raised rates in 1994 and lowered them a year later as he promised clinton

since the late 1970's the fed has a long history of raising rates because it sees inflation fighting as it's primary mission. and it has a long history of causing recessions and financial panics in order to fight inflation. in the last 30 years i can only remember the fed cutting rates in 1998 during a bear market that turned into a financial panic. and that was only because the deal the fed brokered between the wall street banks didn't go too well. late 1980's the fed kept on raising rates after fixing what happened in 1987.
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Re: Local Real Estate Markets
Old 04-12-2007, 07:57 PM   #23
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Re: Local Real Estate Markets

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Originally Posted by wab
Those graphs tell you how much they change. For example, the probability of a June cut went up to 30% when the subprime mortgage mess caused so much concern last month. Each line represents the betting odds on a particular federal funds rate, so follow the "5%" line for the June meeting and you'll see what I mean.
all these predictions have been wrong for at least a year so i don't pay much attention to them.

right now inflation is still going up due to high utilization and the fact that the ethanol nonsense is causing food prices to go up at a high rate.
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Re: Local Real Estate Markets
Old 04-12-2007, 08:04 PM   #24
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Re: Local Real Estate Markets

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Originally Posted by al_bundy
all these predictions have been wrong for at least a year so i don't pay much attention to them.
Suit yourself.

How Well Does the Federal Funds Futures Rate Predict the Future Federal Funds Rate? (PDF link)
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Re: Local Real Estate Markets
Old 04-12-2007, 08:15 PM   #25
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Re: Local Real Estate Markets

and the chart shows that the predictions have been wrong before and "The Pro's" have a long and glorious history of being wrong on enough things to write many books
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Re: Local Real Estate Markets
Old 04-12-2007, 08:16 PM   #26
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Re: Local Real Estate Markets

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Originally Posted by brewer12345
Yeah, we'll see. I'd guess any cut will be August or later, since it will take taht long for the writing to be clearly on the wall.
Should be a good 3rd and 4th quarter
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Re: Local Real Estate Markets
Old 04-13-2007, 07:54 AM   #27
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Re: Local Real Estate Markets

the futures traders like the PPI # this morning. we'll have to see what the market says. YoY it's 1.7% which is within the Fed's range of 1% - 2% inflation. I think it's too high for a rate cut, but probably good enough to keep rates steady. CPI is next week.

www.economicindicators.gov for anyone who wants a schedule. One of these days i'm going to stop being lazy and make up a calender in Outlook or Google or something with a schedule of every single economic # release the market cares about.
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Re: Local Real Estate Markets
Old 04-13-2007, 08:01 AM   #28
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Re: Local Real Estate Markets

In Charlotte, NC, prices are still on the rise... about 7% over last year, I think. Many say that we have been underpriced for a long time, and we're finally catching up with the rest of the country. Also, there are far more people moving here, than moving away.

In my neighborhood (range of 275K-375K or thereabouts), 2 houses have just sold after having only been on the market a 1-2 week time period. So things are moving fast...
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Re: Local Real Estate Markets
Old 04-13-2007, 08:05 AM   #29
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Re: Local Real Estate Markets

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Originally Posted by al_bundy
the futures traders like the PPI # this morning. we'll have to see what the market says. YoY it's 1.7% which is within the Fed's range of 1% - 2% inflation. I think it's too high for a rate cut, but probably good enough to keep rates steady. CPI is next week.
Except that's not the indicator the Fed cares about. AFAIK, they have stated they watch core CPI and the core PCE deflator, not the PPI, although obviously the PPI feeds into those measures.

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Re: Local Real Estate Markets
Old 04-13-2007, 08:11 AM   #30
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Re: Local Real Estate Markets

PPI is supposed to be a leading indicator for CPI and PCE, but I agree that consumer prices are completely what the market will bear.

I remember back in 1999 and 2000 i would go into the big Macy's in NYC and their store brand pants and sweaters were like $40. it said on sale, but that was just a sign. by late 2001 the exact same clothes were half the price when you included the weekly coupons macy's had. by 2002 even stuff like Claiborne which never went on sale and was usually excluded from the coupons was going on sale and included in the coupons.

if you go right now it's like 1999 all over again


and NYC prices are flat to down this year if you take into account the fact that people want renovations done when they buy. if you have junk from the 1960's then you will sell only at a nice discount.
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