Have you ever taken a super ball and accidentally dropped it in a room filled with chairs and watched it go from here to there, to up there and down there and over there and then you duck before it hits you in the head and before you know it, SMASH---it broke the vase with the flowers on the desk. Well, all I can say is -----DUCK------(see the last sentence of this article)
On Friday the financial markets took a plunge while investors retreated to the Treasury market to find refuge in a more stable arena. Why? Because the reports for unemployment rose higher than expected to 5% when economists expected it to be around 4.8%, and when employers only added 18,000 jobs when they expected 70,000. In fear of the economy moving into a recession the Dow Jones fell almost 2%, the S&P 2.5 % the Russell 2000 3.2 and the Nasdaq 3.8 %.
Bonds rallied, the dollar fell versus other currencies and Oil and Gold prices retreated from their recent highs. The average hourly earnings rose 0.4 percent when economist were expecting .03 percent.
The government is scrambling around to stabilize the economy by political and financial means. The markets are expecting the Fed to cut rates again by as much as a half a percentage point. The Federal Reserve also announced that it is increasing the funds available to the new auction that was created to help out cash strapped banks as a result of the sub-prime mess. The auction was created as an alternative to the direct loan approach to banks since they were not taking advantage of the program because of their belief those investors would shy away from bank that had to use such funds. The auction has been a success so far attracting bids for up to three times the $20 Billion amount. The Federal Reserve will be increasing the amount to $30 Billion for the next two auctions. They have also pledged to continue this program "for as long as necessary to address elevated pressures in short-term funding markets"
President Bush, while maintaining that the overall economy is fundamentally strong, may propose his own measures to help maintain the stability. What those measures are is uncertain for now but the word on the street is it may be in the way of a tax cut, like the one we saw right after 9/11 where taxpayers could receive $300 tax cut. One of the many questions, if the tax cut was proposed, is how to pay for this since in 2001 we had a surplus and now a deep deficit.
Congress has several different measures that President Bush supports in terms of housing related legislation. One of them being a temporary increase to the size of mortgages that Fannie Mae and Freddie Mac can purchase, which is currently at $417,000 for a "conforming" loan. This would help people in obtaining mortgages, especially in areas where the prices of homes are drastically over the average home price in the US.
What does this mean for the average Ridgewood, NJ area home owner? Basically it means help is on its way to make your home sell faster and in less time which is a critical aspect of the recovery. Housing in the US is a huge part of the economy and they, the government, knows it. They are working hard for you to keep your home values where they are now and are looking to create appreciation in the future.
So stop Ducking, get back up, clean the mess and let's do some business. Houses are still selling and buyers are still buying. Welcome to 2008. Happy New Year!
About the author: Jeffrey Helton is a RE/MAX Elite Associates sales agent/ REALTOR in Montvale, NJ and specializes in Ridgewood, Glen Rock, Wyckoff, Ho Ho kus, Hillsdale, Westwood and Washington Township. If you are interested in buying or selling real estate in these areas contact Jeff at 201-566-8272. Jeffrey Helton is the proud owner of GettingMyHouse.com and creator of RidgewoodRealEstate.ning.com
