Marketing headlines – Yesterday afternoon, I got a text alert from The New York Times about the federal government’s plan to shore up Fannie Mae and Freddie Mac. Strange to get a NYT alert on a Sunday, just after their big edition hit the doorstep.
Maybe Not so Strange
The government worries about markets all over the world, not just in the U.S. They often time announcements around the opening bell at the Hong Kong market. After Hong Kong opens, markets begin opening in succession. Clearly, the government wanted to send a signal – don’t sell off U.S. securities, we’re handling it.
Eye on the Media
Today was a day we all kept our eyes on the market. What would happen to stocks? Bonds? Banks? Indy Mac was taken over by the FDIC, Fannie and Freddie needed government intervention and predictions of more bank failures followed.
As I said in my recent post The Good News and the Bad, I’m not so sure I always trust what the media has to say regarding the housing market. They do seem to have a bad news ax to grind. Today was an important day to pay attention though. Ax or not, when George Soros speaks, people listen. Soros was interviewed by CNBC and clearly believes that our economy is faltering. While times are definitely uncertain, remember that the more bad news we hear and read, the more likely it will become a self-fulfilling prophecy. Isn’t that what a bank run is? If you see 3 people lining up to withdraw their funds, don’t you line up too? Then there are four in line, then there are five. No one (understandably) wants to be the last one in line – and thinks, “I might as well be safe as sorry.”
The public good is served by the Fannie Freddie handout today. These quasi-public institutions bolster nearly all of the mortgage and housing markets. Left to falter, there would certainly be a crisis of unpredictable proportions. I read one article today stating that some home buyers are rushing to lock their loans thinking that mortgage rates will be going up soon. Put into perspective – I bought my first home for 9.5% and thought that was great – rates will probably tick up rather than race up. And hopefully won’t hit the highs of the 70’s and 80’s anytime soon. That will depend on the Fed’s reaction to inflation along with this banking crisis.
At the risk of sounding Pollyanna and head-in-the-sand, I’ll repeat what I’ve written here several times. Real estate is local and Denver’s market is out pacing most of the U.S. Our days on market are shrinking for certain segments of the market, and there have been several instances where I’ve heard of multiple offers.
People need a place to live, to call home. Worry too much and you may make uninformed decisions. Let the headlines inform you, not paralyze you.