Realtors See Market Coasting For The Rest Of The Year

Realtors See Market Coasting For The Rest Of The Year

Realtors See Market Coasting For The Rest Of The Year

August 9, 2005
A runaway real estate market this year has many economists – and even Fed Chairman Alan Greenspan – fretting about the housing bubble. But the people who sell real estate for a living predict a soft landing for the red-hot market, not a crash that could wipe out homeowners’ gains of the last three years.

The Federal Reserve raised short-term interest rates for the 10th consecutive time today, lifting its short-term rate target to 3.5% from 3.25% and signaling that more increases are to come. The Fed ist rying to deal with strengthening economic growth, a slightly less favorable inflation picture and still-low long-term interest rates.

Read it here first: Real Estate Begins to Cool

As the sector begins to further cool, we foresee several significant elements coming into play: 1) Housing related employment slows and reverses. Think real estate agents, mortgage brokers, durable goods manufacturers, home-builders and retailers. They could move from a hiring mode to laying off sometime over the next 18 months; 2) Major retailers (Home Depot, Lowes, Sears, Bed Bath & Beyond) will feel the pinch, as revenue and profits begin to slow; 3) Home builders, still cheap on a P/E basis, will begin to throttle back growth.

Real Estate Begins to Cool
Real Estate Begins to Cool