federa1.jpeg The Federal Government jumped back into the swampy pool of economic meltdown today, and cleaned up a little, aiding consumers. Wall Street experts speculated a drastic rate cut of 100 basis points, and CNBC hyped-up a potential forecast of a more drastic cut than this. This much of a rate cut would surely spike our deathly-ill economy, and put more money back in the pockets through savings on car loans, credit cards, & the dreaded mortgage payment. However, soon after 2:14pm (Eastern Standard Time) I was glued to the TV screen waiting for the result of the Feds decision. 75 Basis Points! Nice.. Not quite 100 basis points as predicted, but this is a step in the right direction for waking our drowsy economy.

The dollar actually soared and showed signs of life after continuous months of beatings against the Euro, Pound-Sterling, and other noteworthy international powerhouse currencies. When rates drop, that actually destroys the value of “The Greenback”, so why did we see this rally today? (This is what I’m asking myself as I watched my long position with the Euro drop to lower lows, and then lower and lastly, even lower).. My currency trade turned into a complete loss because the speculation of a 100 basis point cut lead the 75 basis point cut to be a let down among international banks & investors. Looks like the cut didn’t quite fill the speculative shoes, in turn, a losing trade for me; however, a learning experience. So, how does the rate cut affect homeowners and our real estate market?The rate will undoubtedly put more money and cash in the pockets of Sarasota homebuyers/investors. Many northeastern second home buyers, who annually lead the serge in real estate buying on the Gulf Coast are waiting patiently on the fence of buying because they can’t dump their northeastern homes. Our market suffers when homes in New York, Michigan, Rhode Island, Maine, Massachusetts, etc. aren’t selling. Consumers need that money from those investments to fuel their Florida purchase. This rate cut will allow them to retain more money by paying less interest, on the home equity lines of credit, as well as motivate their interest to forego the “waiting on the fence stall”, and dive into our real estate market to lock in that dream interest rate on a new loan! Anyone with a home equity line of credit will could see improvements as early as next month. Hope they see that improvement before season runs out huh..

Today was a great day for us, & our turtle-slow real estate market.. Minor improvements will result from savings on credit card bills, & car loans. The only potential hazard in a drastic rate cut like this, could result from a future rate hike due to inflation & quick economic growth. This process is all about timing and improvements shouldn’t come over night. Economic improvements should occur this way to create sustainability. Any “too quick” recoveries will create an imbalance in economic forecasting & financial markets, as well, over purchasing of real estate (which is what brought us to this point)..Congratulations Feds! You got it right today! My homeowners, sellers, & buyers should feel great about the short-term opportunities this could bring to our local real estate market.

Justin