For the first time in its history, the Federal Reserve has set a target for short term interest rates as low as zero percent, which is unprecedented!! This huge strategic shift indicates the central bank’s move into uncharted waters and underscores the Fed’s intent to strengthen the US real estate market any and every way it can!
Since further rate cuts are no longer in the cards, the members of the Feds central committee indicated they plan to continue to deploy all available financial tools and resources at their disposal to stimulate not only the real estate market, but the economy in general. And, new tactics may encompass purchasing mortgage backed securities and other debts that no one else would touch (detailed below).
Sea Change Underway
So what’s next in store for the US economy and the national real estate market? No one knows for sure. But, the Fed has indicated it intends to “flood the economy” with Trillions of Dollars in cash, which it started doing in September. It’s been doing this by buying up debt that no one else wants.
The intent behind all of this is to get banks out of their hold in place mode and get them back into doing what banks are supposed to do – lend money! They have or will have billions of dollars to lend at obscenely low interest rates – you can’t get a better deal than less than zero, unless the Fed starts paying banks to loan money.
Here is a Graphic that shows what the Fed has been up to the last 18 years – note we are at a historical low in terms of rates:
Impact on Las Vegas Real Estate
We think this move by the Fed will do some great things for Las Vegas Real estate and for the country as a whole. But, the question everyone wants to know is how much and how fast?
Banks make money by loaning money – they’ve been sitting on their hands for months in many cases and we think now some of them will leap out of their chairs and get back to work! Cue the applause………
