The Federal Reserve announced today that it will lend Treasuries in exchange for securities backed by mortgage debt. This is a huge step by the Fed, and was coordinated with European and Canadian central banks. The Fed's latest effort to encourage liquidity in the financial markets was behind the run-up in the stock market today.

The Fed is widely expected to drop the federal funds rate next week, but watch mortgage bonds to see what direction mortgage rates may head. For right now, banks don't appear to be overly anxious to increase their lending despite the Fed's $200 billion program.

If I lived anywhere but Las Vegas, I think I'd buy into the doom-and-gloom forecasting that's so prevalent right now. I'm a bit worried about my duplex on the Puget Sound in Suquamish, WA, but much more concerned about my sister's homes in Rocklin and Roseville, CA. While their values have plunged, I have yet to figure out how anyone can afford to buy a home in California in the first place!

Even with our southern Nevada economic indicators looking weak, I'm confident that Las Vegas housing will continue its rebound. Only time will tell us if we'll slow down again as we go into the traditional slow season late in the year. With all the foreign investment dollars pouring into our city, I don't anticipate anything worse than our typical seasonal slowdowns.

In the meantime, pending sales continue to go up, up, up ... and I had another full-price offer rejected this week. My readers might recall my previous statement that banks are getting 96% of their asking price for REOs. They are now averaging 98% of asking price, and nearly 20% of REOs are selling for above asking price. Certainly, the banks have finally lowered the prices to unload some of these homes. But this figure also reflects that buyers are competing for the best deals.

Who said "bottom of the market" first? Oh yeah, that's right ... it was I.

[Email Blogger]