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Michael Benninger's Blog

By Michael Benninger | Broker in Irvine, CA

WHAT THE FED ANNOUNCMENT MEANS TO OUR INDUSTRY


RE: WHAT THE FED ANNOUNCMENT MEANS TO OUR INDUSTRY

Here is the announcement that came to us from CNN at 11:47 AM.

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The Federal Reserve said Tuesday it plans to keep interest rates "exceptionally low" until at least 2013 and acknowledged that the economic recovery is slowing.

The Federal Reserve has kept the federal funds rate near zero for an extended period is to help stimulate the economy. That rate is the central bank's key tool used to spur the economy.

The Fed said growth is "considerably slower" than expected.
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What this means to us in our industry......

There is a tad bit of “histrionics” in this Fed Statement. For the first time ever, the Fed has come out and said that they will keep interest rates ‘exceptionally low” for a SPECIFIC amount of time (“until at least 2013). Usually the verbiage from the Fed is summed up in sound bite something like “the foreseeable future” or something else that is NON-specific.

What makes this announcement so important is that it removes speculation and uncertainty from the equation and gives us all some kind of timeframe to work within. Businesses starting up will now will know that they have a certain amount of time to get things “up and running” without worrying about higher interest rates coming in unexpectedly and interrupting their initial growth.

For our industry, it’s great news because it will do nothing but sustain our already improving market and allow time for banks to get their “shadow inventory” out to a public that will welcome them because of the low interest rate environment that will exist.

So pick up the phone and call those clients that are looking for homes and know that we are continuing to move towards a better, healthy market for all of us. If you have any questions, please do not hesitate to call me at anytime

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