Allen Greenspan RETIRED!!

[reoconsultants]

Allen Greenspan retires as of January 31st 2006.. What are your Thoughts on what this is going to do to interest rates?

Here are mine I honestly think rates are going to stay level for 6 months or so after that they will go up! How high is the question?

[DeeinAustin]

I had a discussion about it yesterday. The mortgage person was saying the replacement for Greenspan has a more "modern" approach to fiscal policy. He's more apt to get involved and lower/raise rates if the economy is lagging or vice versa.

I believe he mentioned the stock market was doing better since the annoucement.

[Propertygirl]

The new Chairman is Ben Bernanke a well respected with very high credentials. But the bond market perceives Bernanke to be more dovish toward inflation than Greenspan.
Greenspan is scheduled to meet on the Monetary Policy 3 more times by the end of January. Once on November 1, December 13 and January 31.
Greenspan has been raising interest rates at his "measured" pace since June of last year to try and slow down inflation before he left his office. It is very likley that he will raise rates .25% more each time he meets by the end of Jan. So that is going to put prime at 7.5% Which will really start to move things.
All of the Helocs that people did for the last few years, and all the activity with the option arms and anything tied to prime or the Libor are in for a pretty big swing.  But I do believe things will stablize next summer.
Deein,
Your mortgage person was right about the dow.
When Ben Bernanke was appointed at 1 pm yesterday the dow had a 170 point rally. The largest rally in 6 months.
Remember as interest rates go up bond prices go down and that is where our mortgage money comes from....
Mortgage backed Securities. (bonds) So when the bonds drop in value it is going to really hurt us in our rates to the retail market.

[jpstephens]

So ya think this will be good/bad for us? What will this do to affect wholesalers?

[Propertygirl]

JP,
I think it could slow down some of your retail buyers because they won't qualify for as much as they did when rates were lower.
But on the other hand I think there are going to see more deals out there because of the default rate. When those adjustable rates start adjusting to these new Indexes we are going to see some people struggling. I think if you can negotiate a little better deal each time then it won't matter because you can sell it for less if you have to.

[propertymanager]

Ramona,

I think the higher interest rates, higher gas prices, higher home heating prices, and the real estate bubble "burst" will be good for buy and hold investors.  All of those people who really shouldn't be home owners will once again be renters.  Right now the pool of available renters is bad, but will soon be improving.

My biggest concern is that we will be forced to evict many renters this winter because of the higher heating prices.  I just prepared a letter to all the tenants that I will be handing out when I pick up November's rent.  This letter discusses ways to lower their heating bills and describes the HEAP program and how to apply.  

Mike

Mike

[4EEM]

The market still needs to tighen up some more.  Average 30 Year par pricing needs to be atleast 6.500%, but I don't see it breaking 6.750% in the next year.  The FED has been very responsive and I think they will continue to be with or without Greenspan.  

Rates are going up?

[jpstephens]

Man it seems like you can never know everything in this business. Just got a grasp on initial investing and am ready to start and then jargon like this comes out. I guess it's something I have to understand, anyone care to explain how all this works together and can effect my real estate investing?

[niravmd]

from what little i've read on bernanke, it seems he's keen on keeping liquidity in the market to prevent
any market instability. So he's probably going to keep flooding  the market with dollars and cheap loans!

besides, i dont think he's going to rock the boat for a few months after he takes office. lets see how it
pans out.

[kdhastedt]

I thought Greenspan was ugly until I met his wife!  Luckily they married late in life and there are no children!

LOL

Keith

[tedjr]

Howdy Keith:

Man that is just mean but funny.

Howdy JP:

When I first heard Greenspan's name i thought it was a new Greenpeace policy or something. Thing is it does not matter is you know any of this stuff. I have seen grade school drop-outs buy low income houses and make a fortune just buying and fixing and selling and buying and renting. It ain't brain surgery. Even Larry the cable Guy and his Red Neck buddies can do it. I have seen a lot of posts trying to over complicate the business. Just buy low and fix and sell or keep and rent. PERIOD. I like low income areas because  there will always be demand for affordable housing except in severe  depressions and then we all need to watch out.

[Markmcg]

Hello Ted,

You know, sometimes the most powerful messages come in the simplest form.  Just buy low, fix and rent or sell.  It's taken me over a year to finally arrive at that conclusion.  Many newbies try to overcomplicate things especially whan getting started.  My compliments to your wisdom.

Mark

[kdhastedt]

I read the posts form some of the folks here and I get an "ice cream headache"!  They start talking about super-dooper spreadsheets, and analyzing software....maybe I'm old fashioned or stupid but I use a piece of paper and my favorite color crayon.  But, all my properties have at lease 20% equity and cashflow at least $250 a month!

They make it waaaaaaay too hard.  You two are right on the money!

Keith

[Propertygirl]

Hi Ted & Mark,

I have to agree with both of you. Anything will sell if it is priced right.
I have always said " It's not what it can sell for, it's what you can pay for it that makes the difference."

I don't think the rates are going to hurt investors too much because investors are going to do what investors do.... and that is buy houses below market value.

Ramona

[Valgolas]

Hey, Robert, do you think that it matters much, for long-term interest rates, who the chairman of the Fed is?

I know the Fed can influence short-term rates, but do they really have much control over thirty-year fixed rates?