Can the Fed Save Real Estate
Another rate cut was doled out by the Fed last week and was met with the largest rally in five years on the Dow Jones.
Is this latest cut enough to jump-start the stagnant housing market?
The Fed’s rate cut will indeed lower rates on a range of consumer loans, including home equity and mortgage loans. This effectively increases the number of home buyers able to make a purchase, which should increase demand, therefore lead to increased prices.
This is great news for homebuilders who now find themselves with completed new homes that are sitting on the market. These homes cost too money to allow to sit empty, and even with this rate cut, there is still a possibility of new-construction foreclosures.