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Charlie Ragonesi All Mountain Realty Big Canoe and Mountain Blog
On line at www.allmountainrealty.com Call at 706 579 1098
The Mountain Real Estate Report Interview with The Federal Reserve
The Mountain Real Estate Report is heard through out our beautiful North Georgia Mountains. This week we are very pleased to provide you with an important interview we did with Tom Cunningham V.P. from the Federal Reserve Bank in Atlanta. Tom focuses on Real Estate and the economy. There is a lot of great information and insight in this interview from the folks who should be i the know at the Central Bank for the United States. I hope you all enjoy this show and come away with good information on our housing market and the economy
10 comments • Charlie Ragonesi Big Canoe, Jasper, North Georgia Pros • November 10 2010 08:44AMThe Atlanta Fed's Real Estate Guru speaks to the Pickens Board
The Pickens Board of Real Estate meeting this month was a little more interesting than usual. We had a guest speaker, Tom Cunningham, from the Atlanta Federal Reserve speak. Tom is a VP with the Fed and is in Charge of research and development as it relates to real estate. So his talk was much anticipated. Here are some of the points he made that we all can find interesting
1 The Fed intervened in the financial markets to try and prevent a melt down. The Fed bought a tremendous amount of Treasuries as well as mortgage backed securities.The problem came in evaluting securties and the lack of assigning value to them caused a run in the markets.
2 The Fed has pretty much stopped buying Mortgage backed securities and has them off their books. Opinion was that once the Fed stopped buying these securities interest rates would rise. This did not happen. The indications are that the market for good mortgage backed securities is more bullish than anticipated ( good news)
3 The U. S, economy is growing at a rate of about 2 percent. This is good news as it dampens the worries over inflation. The bad news is growth needs to be higher to reduce the unemployment rate.
4 Productivity gains in the private sector account for more job losses in the U.S. moving jobs overseas. This is something that is not equally felt across job markets. "Low end" jobs are moving over seas but "high end" jobs are actually increasing.
5 Consumer spending in the US accounts for about 75 percent of our GDP. The only other country whose economy is so dependent on consumer spending is , interestingly enough , Greece.
6 The Bush tax cuts did little to stimulate the economy. Their expiring may have a negative effect on the economy. However data is inconclusive and some models actually show the tax expiration having a positive effect. So the jury is out on this issue.
7 Housing in Georgia is very dependent on influxes of people from other areas. Georgia has grown more than the national average due to this influx. However as people in other parts of the country cannot sell to move it has had a negative impact on the Georgia housing market.
8 Potential problems for our recovery are, strength of the world economy. Right now the world economy is good and so we have the ability to export and build jobs and revenue. Our exports over all are actually increasing.
9 The Fed is waiting for financial reform legislation to come out of Congress. This legislation is needed to regulate going forward
10 When asked if the Fed is advocating a return to Glass Steagall the response was that is a political issue and the Fed has no position .
11 States are faced with balancing budgets with reduced sources of income, even if a State does not have a balanced budget law. The problem is States that do not balance their budgets will have a hard time raising capital through the sale of bonds. This is a troubling issue in the economy.
Over all the picture for the economy is mixed, with job creation, or lack there of being a major concern. The financial picture however is a lot better than it was 2 years ago and that is a good sign
I have hit the high lights of Toms talk and hope you find it interesting. These folks are numbers people so his conclusions are mostly drawn from data. So stuff like, why does bank X stink at responding to short sales and questions like that were things he was not at our meeting to talk about
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Charlie Ragonesi All Mountain Realty Big Canoe and Mountain Blog
On line at www.allmountainrealty.com Call at 706 579 1098
2 comments • Charlie Ragonesi Big Canoe, Jasper, North Georgia Pros • August 20 2010 08:39AMInterest rates Creep up
If you are dealing with buyers on a budget you will have noticed that interest rates have crept up this week. Why ? The Federal Reserve is selling off some of their securities and buying mortgage backed securities. This is another effort to rid us of the toxic mess we are currently in thanks to Wall Street finance people. Now when you sell securities you have to increase the yield on the securities to get people to buy. Right! Over supply means higher interest rate. It is the old supply and demand thing. The Fed is walking the economic high wire trying to remove toxic assets so as to stabilize markets. But at the same time they have to keep their own sheet in balance so they need to sell securities. The net is a rate increase on mortgages. Here are a couple of things to remember.
1 Mortgage rates are at really low points. We are still under 6%
2 Talk to your buyers about responsible arms that may offer lower rates.
3 FHA loans are assumable. So if rates increase a buyer locking today will have an attractive package to sell later on
I do not think these rate increases are a sign of rampart inflation as some doom and gloomers say. Of course I have always blogged that the number 1 fuel for inflationary fires is government deficit spending. So of course I am concerned. But I think these rate increases, if they stay moderate, and under 6 % reflect the Fed's efforts to balance a market and are not a bad sign.
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Charlie Ragonesi All Mountain Realty Big Canoe and Mountain Blog
On line at www.allmountainrealty.com Call at 706 579 1098
4 comments • Charlie Ragonesi Big Canoe, Jasper, North Georgia Pros • May 28 2009 07:40PMContent © 2009 'Frequent Contributors'. Design © 2009 ActiveRain Corp.
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