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  • From: Gene GeRue <genegerue AT ruralize.com>
  • To: homestead AT lists.ibiblio.org
  • Subject: Re: [Homestead] land prices!
  • Date: Wed, 09 Nov 2005 09:38:07 -0600


One thing I read recently coupled rising interest rates, reduction of house
price increases, and stagnant incomes. This implies that homeowners are
not so able to pull equity out of the homes. This in turn leads to layoffs
in the mortgage and home construction fields.

The interaction of local, state, regional, national and international economies have become more obvious. I think of the water analogy, that we all live downstream. So, too, it is with prices and wages. We often decry federal programs that give large businesses a lift. But sometimes I think that those big businesses are at the top and we are at the bottom. I guess that's where the phrase "trickle-down" came from. Perhaps it works that way sometimes but not always. Seems that most of the largesse stays at or near the top.

You will note that the Fed has been very conservative about interest rates, moving them down over a long period and now moving them back up, only a quarter percent at a time, then waiting to see how the economy reacts. Their prime focus is on controlling inflation. Mortgage interest rates are not directly tied to the Fed rates but instead are more a reaction to bond rates. Investors choose bonds or mortgage securities depending on return and also security.








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