How Does A Fed Rate Cut Help Real Estate Buyers?

By: Nick Deonas

The Fed recently lowered the key interest rate to one percent. This is the rate the banks are charged to borrow money. I had a customer ask me if this meant he could now start looking for that investment property to purchase because the interest rate was lowered. Well, not exactly, you see the problem is not what the Fed charges banks to borrow, it is the banks aren’t doing what banks should be doing, loaning money.

There are buyers with good credit scores, secured employment and collateral who are finding it very difficult, if not impossible to borrow. If they are having a hard time, what do you think the average “Joe” is having?

In the meantime, homes are sitting on the market, contractors are shutting down, sub contractors are without work and drawing unemployment and our economy is sinking lower.

I have given this some thought. I wonder what would happen if the Fed were to dramatically increase the interest rate they charge banks for funds, then start discounting the rate of their next loan based on the amount of money they put on the street to consumers and businesses. I bet this would get their attention.

Banks are not designed and the Fed should not allow the hoarding of funds, especially in a time of National crisis. I read with interest this past Monday that the Administration was now getting involved and telling the banking world to start lending money, and this revelation only took a year to figure this one out. In the world of Government I guess this is considered “the speed of light”. Lets keep our eye on the Fed and what is coming next, should be interesting.

Four Hour Brownies

By: Judie Mackie

This is the funniest recipe I have ever read, or heard, or um, watched. I had a sweet tooth and was looking for a recipe, when I ran across the following title:

‚ÄúIt’s like it’s hot chocolate… but it’s a brownie! In a mug! Baked in your crockpot!‚Äù Read more

Exactly What Is A Real Estate Bubble?

By: Nick Deonas

Herd instinct can be seen even in mob or riot situations, people begin to follow others and mimicking those in front of them. How many times have you seen people jump on a band wagon if they think there are profits to be made? Someone in the office has a ‘hot stock tip’, now the majority within the office wants to get their shares, no research or study of the product, hurry we can’t wait any longer, got to have it. This usually will end up costing us in the long run.

There are many motivators to cause a bubble. The fear of being too late and there won’t be any left is one fear that a lot of women fall into when shopping, we have to hurry to down to xyz department store for the sale, hurry, I know it’s four in the morning, but the store opens at nine and we don’t want to be late, and we want to be first in line.

Our housing and financial bubble goes a little deeper then just too many people wanting their piece of the pie though. The government played its own part and is to shoulder the majority of the blame. The Federal Reserve’s policy of cheap money, Fannie and Freddie’s enormous appetite for junk mortgages…urged all the way by politicians trying to make credit available to poor and risky borrowers.

I have been in the Real Estate industry for about thirty three years, I don’t think I am the smartest Broker living, but I have seen my share of crazy markets and associated terminologies. The later part of 05 is when I first heard the term ‘real estate bubble’. I have to admit, I actually did a double take as I listened to the news that evening. So exactly what is a bubble, how do you know when you are in a bubble, how do you know if the bubble is about to burst?

I guess you could say a bubble is sort of like pornography; everyone has his or her opinion of what it is, but impossible to pin a definition to it. I guess the old saying they used in Congress once, you will know it when you see it, may be true.

In the economics profession bubbles can be embarrassing, it’s not that we have no idea what causes bubble to form, it’s that we have too many ideas for comfort. There are those who will tell you that bubbles are merely psychological. Others will tell you that bubbles are stoked not by markets but by governments. Then we have the one unexplainable theory that some of the most famous bubbles weren’t bubbles at all.

I would think the psychological explanation would be the easiest to go by: People get carried away too easy; they tend to follow the crowd. They hear stories of their neighbors getting rich and they want a piece of the action. They are easily led to believe that somehow, the price of stocks (1929) or dot-com start-ups (1999) or real estate (2006) can only go up, so they all want a piece of the pie. Now it becomes a feeding frenzy that begins to get larger and larger, thus the bubble effect forms. Economist would call this the ‘herd instinct’. History teaches us though that most herd instincts seem to cost us money in the long run.

Bubbles all have their own engines to power them; it could be fraud, greed, perverse incentives, mob psychology and government incompetence. We should all understand one thing though, no matter how much hysteria there is the bubble will only get so big before it begins to deflate at some point. It is then the cold hard awakening to reality sets in, but by then our money is usually gone. In the future if you hear of something that is just too good to be true, remember what my grandmother would say, it is too good to be true, turn around and run.

Ants on A Log

Ants on A Log

Even the littlest hands can help make “Ants on a Log”.
Help the children count out the raisins. It’s fun math!
For those who are still hungry, spread peanut butter on small
round crackers and have the kids make eyes, nose and mouths with the raisins. Read more

Search Amelia News

The Search Amelia Business Directory is gradually being posted. We welcome all businesses in our community to log on and submit your Web site’s link. If you do not see your Web site listed please log in and send it to us or simply let us know and we will gladly post your link in our directory!

If you do not have a Web site, let us know, we can help you with that, too!
Thank you!

Pirates and Jaguar Football

Fernandina Beach High School Pirates lose to Bolles in Friday night’s game with a final score of 55 to 13. They are in good company however, as the Jacksonville Jaguars also lost this weekend to the Cleveland Browns with a final score of 23 to 17.

Georgia-Florida Football

One of college football’s Top 10 rivalries will unfold November 1 at Jacksonville’s Municipal Stadium. The University of Florida Gators take on the University of Georgia Bulldogs and the World’s Largest Cocktail Party commences. Fans of both teams make Amelia Island home for the weekend because of our close proximity to Jacksonville, Florida.

A variety of special events are scheduled in Fernandina Beach for this exciting weekend of football with street musicians entertaining along Centre Street, in historic downtown Fernandina. The Spa & Shops at Amelia Island Plantation is offering its own activities beginning Friday, October 31, with a pre-party from noon to 5 p.m. At 5 p.m. the party continues at the Dawg/Gator Boardwalk Bash, featuring dollar beers and live entertainment. At 8 p.m., the ticketed event called the “Bash” kicks off at the Grand Pavilion. This exciting dance party features entertainment by two of America’s favorite recording acts, the legendary Tams, and The Swingin’ Medallions, The Party Band of the South.

 

Amelia Island Voting

Registered voters began casting ballots Monday for early voting for the November election.   You may cast your ballot in person between 9 a.m. and 5 p.m. Monday-Saturday at Fernandina Beach City Hall, 204 Ash Street or at the Supervisor of Elections Office, at the James S. Page Governmental Complex located at 96135 Nassau Place in Yulee.  If you are on the West side of the county you may cast your early vote at Callahan Town Hall, 542300 US 1 or at the Hilliard Branch Library located at 15821 CR 108.

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