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July 09 Real Estate Market Report

The Austin real estate market appears to be stabilizing with sales down just 4% and the average sales price down just 3% from this month a year ago.  Current US Treasury actions, however, could significantly impact all of us soon!  Read on to hear how our last market report ruffled some feathers.
 
First, however, we want to invite you to our next 3rd Thursday Logo event at the Belmont.  We will have free dance lessons and a great raffle.  Click here for more details.
 
In the last market report I mentioned that the US government could not possibly continue to spend money at its current rate without being forced to monetize its debt by printing more money and in turn watering down the money already in circulation.  Some readers perceived this as cynical.  (I appreciate the fact that they are engaged enough to care!)  To that point however, a recent auction of 5 year treasury bonds “failed” when foreign buyers left the trading floor in the middle of the auction, indicating the US may be fast approaching its credit limit.  This forced “primary dealers” to bid on the bonds in order to maintain their dealer statuses.  At a subsequent auction a day later 7 year treasury bonds sold like hotcakes, indicating to the media that demand for US debt was strong.  The fact was, however, dealers were again the main purchasers buying up $10 billion of treasury bonds.  This made no sense until 5 days later the Federal Reserve bought $4.8 billion of the bonds the dealers had bought at auction.  In other words the US government is buying its own debt, a back door approach to printing more money and monetizing the debt.  This continues to heighten my concerns that the next 12 months will result in increased inflation and higher mortgage rates as bonds become increasingly less desirable.
 
The good news, at the present, is there are three months left to take advantage of the $8,000 first time homebuyer tax credit that expires November 30th.  This money does not have to be repaid, and combined with the current interest rates of just over 5% it is an amazing but short opportunity for those in a position to take advantage of it.  FHA financing only requires 3.5% as down payment and these funds can be gift funds.  Click here to see a video clip of us on News 8 Austin explaining the benefits of this program, or call us or email us today if you would like more information at 512-275-9675 or
info@yorkgroupaustin.com.

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