Florida Housing Market

 Boynton Inlet

 Nov., 2010

            "The Florida Housing Market"

Tic Toc, Tic Toc, Tic Toc…….
My, things are changing so fast in the mortgage world; it’s enough to make your head spin.  From rules and regulations to the interest rates this past week.

Rates in the past week have gone up .5% after dropping to record lows for nearly a month. What has caused this is the Federal Reserve's 2nd round of Quantitative Easing or better known as QE2.

The first round of QE focused on buying mortgage backed securities which helped get long term interest rates to the record lows we have recently enjoyed (not that most of us where in a position to take advantage of it).
Bernanke announced at the last FOMC that the FED was going to buy $600 Billion worth of Treasury securities mostly in the 7 to 10 year range thus QE2 was born.

This is a bold and questionable move as many economists feel that the risk of such actions outweighs the benefits.

All I can think is that the FED knows something we don’t and doesn’t like what it sees in regard to continued deflation as this move is considered very inflationary which is what is pushing up the 30 year mortgage rates.

A Washington Post article quotes Bernanke on QE2 “This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action….Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending.”

It will be interesting to find out years from now if Bernanke and the FED will be looked upon as heroes or zeros as these are uncharted waters that the Fed is sailing upon.
Tic Toc, Tic Toc, Tic Toc…….
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According to Core Logic there are 11 million home owners that are currently underwater on their homes value but are still current on their mortgage payments. There are another 2.5 million that are within 5% of being underwater.....Lets hope they can hold their breath.

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Retirement Planning

If you had purchased $1,000.00 of Nortel stock one year ago, it would now be worth $49.00.

• With Enron, you would have had $16.50 left of the original $1,000.00.
• With WorldCom, you would have had less than $5.00 left.
• If you had purchased $1,000 of Delta Air Lines stock, you would have $49.00 left.

But, if you had purchased $1,000.00 worth of wine one year ago, drunk all the wine, then turned in the bottles for the recycling REFUND, you would have had $214.00.

Based on the above, the best current investment advice is to drink heavily and recycle.