Thursday, June 26, 2008

Weekly Sales Report

At one time all we heard about in the media were reports of the housing market and credit crisis. Although we are still in the midst of a struggling market, it seems that now people are more worried about the prices of food and oil. Of course, it is all so intricately connected.

Everyone agrees that when prices are down it is a good time to buy, and everyone agrees that prices are down. The optimum time to buy is when prices and interest rates are both at their lowest. Again, at the moment, interest rates are still fairly low. The problem people have who say they are going to wait until the market bottoms out is that interest rates are only expected to go up. If that happens, the slight decrease in sales price may be counter acted by a rise in the interest rates.

The good news on that front is that the Fed did not raise the interest rates yesterday, which everyone was expecting them to do. They did acknowledge the complexity of the problem, which is trying to keep the economy from slipping while at the same time trying to keep prices from skyrocketing. The problem with the rising prices on staples such as food and fuel, is that it is a world market issue and "beyond the reach of the US central bank" as stated in the Los Angeles Times this morning.

Normally the answer to out of control prices is higher interest rates. The Fed recognized that raising the interest rates in an already wounded housing market could be disastrous. That is the decision for now, anyway. We will, of course, keep a close watch.

So how is our local San Francisco market doing right now? Sales this past week were at an all time low for the year. Having said that, they were at an all time high for the two weeks prior, and judging by the size of the Zephyr office tour for properties coming out in the next week, the sales number will be back up before we know it.

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