It's the fundamentals Stupid
While Wall Street is rejoicing about the 50 basis points rate cut, I watched the talking the pundits discussing whether or not this would "save the housing" sector. It's unlikely to do that since the fundamentals of the housing market haven't changed. Properties are well out the reach of the average home buyer. In many California markets (San Diego, Bakersfield, Tattoine) properties were bid by people speculating in the market. Now that the easy credit is gone, there isn't anything supporting these prices. Prices will continue to moderate or stagnant for the next three years in California and the cutting of the discount rate isn't likely to change that little fact. In the end people need to be able to afford their monthly mortgage payment and you cannot do it with many California communities.
