Fed Cut the Interest Rate Article 9/20/2007

Although this is a nationwide report, the real estate market in El Paso, TX is still in good condition and it is a great time to buy.

Fed cut could buoy housing markets
By Les Christie, CNNMoney.com
NEW YORK -- The Federal Reserve's aggressive half-point cut Tuesday could provide support for a slumping housing market.
A quarter-point drop had already been priced into the market for Treasury bills and other instruments tied to mortgage rates, according to Richard DeKaser, chief economist for National City Corp. The deeper cut means mortgage rates may have a little more room to fall, giving support to prices.
Home prices are expected to slump through 2008
The Fed Funds rate affects a range of consumer loans including home equity and mortgages. Lower mortgage rates would add to the number of home buyers able to afford to make purchases, increasing demand for properties and buoying home prices. Buyers generally care less about the actual purchase price than they do about the size of their payments. If rates drop, so will monthly debt obligations
Interest rates for conforming loans -- those of no more than $417,000 -- are already reasonably low, averaging 6.31 percent for a 30-year fixed-rate loan.
But there's an important class of loans that might benefit from the big cut: the high-ticket home mortgages known as non-conforming or jumbo loans. These loans have no guaranteed secondary market because they exceed the $417,000 cap, and Freddie Mac and Fannie Mae will not buy them.
With investors wary about any loan perceived as carrying the least bit of risk, jumbo rates have risen in recent months. They carry rates about a full point higher than conforming loans. Jumbos are especially important in high-priced housing markets such as New York, California , Washington D.C. and Boston.
Jumbo rates may come down if the cut makes consumers more confident, according to Mark Zandi, chief economist for Moody's Economy.com.
However, the real problem in the housing market is not interest rates, according to Keith Gumbinger, vice president for HSH Associates, a mortgage industry publisher. It is that there is not enough money available for making loans.
"The liquidity problem hasn't changed," Gumbinger said. "The primary issue is trust between buyers and holders of debt." Investors holding worthless or heavily discounted paper are not eager to buy more.
As a result, Gumbinger said problems in the housing market problems are too entrenched for a Fed rate drop to have an immediate impact.
Trust can take time to rebuild. Something that might speed the rebuilding process is better-than-expected earnings from the major Wall Street banks. Tuesday, Lehman Brothers' reported higher-than-forecasted profit, which allayed fears about the wallop that the mortgage crisis may inflict on Wall Street. Goldman Sachs, Morgan Stanley and Bear Stearns are due to report earnings later this week.
Home prices in many parts of the country remain out of reach for average Americans, leading to slow sales and lengthening inventories of houses on the market. Also adding to listings is a flood of new foreclosures hitting the market.
That inventory is weighing heavily on housing markets, according to Zandi, and much of it will have to sell through before prices start to rise again.
It didn't help market confidence that venerated ex-Fed head Alan Greenspan came out and opined on the possibility of double-digit housing price declines, according to Dean Baker, an economist and co-director of the Center for Economic and Policy.
"That has to be very worrisome for anyone lending into these markets," said Baker.

Remember 9/11

As we near the date of September 11th, I ask that we all say a prayer for all of our military personnel that are serving our country and making it what it is today.

I am sure that everyone knows someone that is serving so please say a special prayer that they be safe and return home soon.

If you have been reading my blog then remember to Pay it Forward for our soldiers or anyone that gives to us like police, firemen and any others that help protect us.

Thank you.

Patti Olivas

Great things Happening in El Paso, TX

Better and better: Enjoy Labor Day in El Paso
El Paso Times Staff
Article Launched: 09/03/2007 12:00:00 AM MDT

On Labor Day, today, it is not a cliche to put "hard-working taxpayer" and "hard-earned money" into one's conversation. By all means, El Pasoans have earned it.

It's easy to say "hard-working" and "hard-earned." But it's not easy to do that. El Pasoans are doing that better and better as more people are holding down jobs and more people are paying taxes that hopefully move this city forward.

Economically, we have been behind cities in our region for some years and, being a border city, we deal with problems other cities don't have. For instance, our unemployment rate continues high in relation to the state -- but the unemployment rate is still going down.

That's because good things are now happening in El Paso.

It seems there is more and more good news about Fort Bliss expansion, and its mission, every week. Late last month more than $100 million was earmarked for El Paso in the higher-education medical fields. The University of Texas at El Paso was granted $60 million to build a new facility for its College of Health Sciences. El Pasoan Paul L. Foster donated $50 million to the Texas Tech University Health Sciences Center -- home of the new four-year Texas Tech medical school.

The many millions of dollars going into Fort Bliss expansion and health facilities will ultimately go into jobs and education for El Pasoans and it will help bring more taxpaying citizens to El Paso to not only give El Paso the top military installation in the Pentagon, but help it achieve its goal of becoming the Medical Center of the Americas.

Data show that 8,400 jobs were added to the El Paso market since July 2006. That is a 3.2 percent annual job gain at a time the rest of Texas was at 2.7. El Paso is ninth in job growth among 26 Texas metro areas.

Yes, things are looking better for El Paso -- better even than last year when reports were getting more and more positive.

Jobs are coming. We are learning that to get the best of those jobs, a good education is required. UTEP, with its border location, is a world leader in research pertaining to border issues, such as health care, health research and the overall economic issues of our country's southern border.
The Texas Tech four-year medical school will draw the country's brightest when it comes to the medical fields.

The Fort Bliss mission of Future Combat Systems is a mega-million-dollar endeavor.
To fuel the ongoing endeavors of UTEP, Texas Tech and Fort Bliss, other companies will come to El Paso and stand along side.

Last year, it was getting better in El Paso. This year, on this Labor Day, El Paso continues to be a better and better place to live.