Thanks to all of you who came out to our First Annual “Fight Your Property Tax” Day atMozart’s Coffee House. We were somewhat overwhelmed by the demand and thank all of you who waited so patiently. We will be there again next year with double the help, so plan to come back!
…the Fed is caught between a rock and a hard place. They are debating raising the Fed Funds Rate, which is the base rate for many consumer and business loans. The Funds Rate has been kept near zero to keep money flowing and to help stimulate the economy. There have been some indications that the economy is recovering, though the national unemployment rate remains close to 10% (a near 60 year high). Raising the Funds Rate now might stymie the recovery and push us back into a recession. On the flip side, keeping the Funds Rate low may result in inflation. Inflation erodes the bond market, which will result in higher mortgage rates. This in turn will have a negative effect on the housing recovery and the economy as a whole.
Currently, the best news for the US economy is Europe’s economic woes. The Euro has devalued significantly as the European Union struggles to keep Spain, Portugal, and Greece solvent. With their own nearly Trillion dollar bailout on the books US Bonds have continued to be a relatively safe alternative for many European investors. This in turn has kept mortgage rates at near record lows. Swimming faster than Europe may keep the sharks at bay temporarily. The US must address our debt soon, however. Our debt to GDP ratio is over 94%, and by 2012 our debt will equal our nation’s entire annual production!
Locally, last month’s home sales were up 31% while condo sales were up a staggering 63%. Expect those numbers to fall off abruptly with the Home Buyer Tax Credit program going away.