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Michael Crawford #1 Realtor in Temecula Valley

Michael Crawford #1 Realtor in Temecula Valley

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Fed slashes overnight rates by 50 basis points

Markets welcome reduction in federal funds, discount rates

Tuesday, September 18, 2007

Stocks soared but yields on 10-year Treasury note stayed stable after the Federal Reserve slashed 50 basis points off both the federal funds rate — the rate banks charge each other for overnight loans — and the discount rate, the rate the Fed charges for direct loans to banks.

The reduction in the target for the federal funds rate, to 4.75 percent, marked the first time the Fed had cut the overnight rate since June 25, 2003. At the time, the Fed was capping a series of reductions intended to encourage borrowing and stave off a recession after the dot-com stock market bust and the Sept. 11, 2001, terrorist attacks.

Before the Fed started cutting the federal funds rate on Jan. 3, 2001, it stood at 6.5 percent. A year and a half later, it stood at 1 percent.

Some analysts said the drastic reductions in the federal funds rate helped fuel the housing boom by easing lending standards.

The Fed then tried to put the brakes on growth by raising the federal funds rate 17 straight times between June 30, 2004, and June 29, 2006.

Just as the Fed was criticized for slashing the federal funds rate so drastically after the dot-com bust, some said it went too far in tightening monetary policy in an effort to keep inflation in check.

In a statement explaining today’s decision, the Fed’s Open Market Committee said economic growth was moderate during the first half of the year, but that “tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally.”

Lowering the federal funds rate “is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time.”

The Federal Reserve’s Board of Governors also unanimously approved a 50-basis-point reduction in the discount rate, to 5.25 percent.

The Fed slashed the discount rate from 6.25 percent to 5.75 percent on Aug. 17, in part because mortgage lenders have been having trouble obtaining short-term funding.

The Fed acted after Countrywide Financial Corp. announced it had drawn down an $11.5 billion line of credit with 40 banks, and a Merrill Lynch & Co. analyst warned that the company could face bankruptcy if it was forced to sell of assets at bargain-basement prices.

The Fed said it would accept mortgage loans as collateral at the “discount window,” and extended the terms of what are ordinarily overnight loans to up to 30 days.

Real estate experts see industry’s future

Business won’t survive without stellar service, Web 2.0

Friday, September 07, 2007

What are the changes taking place today that will influence our business tomorrow? Learn what the experts at Real Estate Connect think the future of real estate will be like.

I’ve always admired Craig Newmark, the founder of Craigslist.com. He has a terrific sense of humor, especially when he referred to himself at this year’s Connect as “eye candy.” He is an amazing model for our industry. For a man who is worth billions, he describes himself as “just the customer service guy who answers the phone.” I have every confidence that Newmark takes customer service calls. At the heart of what our business should be, even in light of all the technological innovation, is being of service to those who elect to do business with us. Our business is not about just the numbers, it’s about making a difference to those who lives we touch.

Newmark believes that people are basically good. He is now electing to devote both his time and his money to creating peace in the Middle East. In the past, we have heard more from the extremists in power. What Web 2.0 offers is a chance for those who are “normal” to have a louder voice than the “crazies.” What does this have to do with real estate?

Newmark says that advertising today is about authenticity; it’s not about scripts or Madison Avenue advertising tactics. Instead, it’s real people telling real stories. It’s time to stop apologizing for who you are and connect with the world out there. Ultimately, it’s the personal chemistry that gets you the business — not how fancy your Web site or advertising copy is.

Hugh MacLeod in his keynote echoed similar sentiments. According to MacLeod, “The market for something to believe in is infinite.” MacLeod spoke extensively about “social objects.” A group of 1,000 baseballs could be identical. However, the one that Barry Bonds hits to set a new world record has extreme value. It’s not the object that has value — it’s the story. What matters are the conversations that we have with others about the social object.

This dovetails with the work of Clotaire Rapaille, the marketing guru for 50 of the Fortune 100 companies. Americans are not really buying the bricks and mortar — what they’re really buying is the dream of home ownership.

Web 2.0 is about sharing our experiences. Coca Cola and Doritos elected to have their customers compete to see who could create the best commercial. Customers voted for their favorite. They talked to their friends, argued for why their choice was best, and ultimately created more buzz and word-of-mouth marketing than any well-executed advertising campaign from an agency could generate.

We are already being inundated with stories and pictures from numerous sources. A great video can give you an international reputation in just hours. Sites such as Flickr.com allow us to share our photos. YouTube.com, HelloWorld.com, BlipTV.com and Blinx.com are places to share our videos. Blogs and social networks such as Facebook.com, Linkedin.com, RealTown and MySpace.com are creating international communities of like-minded people where they share their experiences and seek advice. Sites such as Twitter.com allow people to share what they’re doing this moment.

As computers expand from dual processors to 64 processors or even more, our ability to access full-length, high-quality video and even three dimensional communications will follow. The new “maplets” from Google allow you to populate those maps with gas stations, museums, your listings, or just about any other information that you would like to include. Microsoft’s Virtual Earth is also moving into providing the equivalent of 3-D imagery.

Here’s the bottom line: our clients need us to provide them with a stellar customer experience. They want us to be their trusted advisor and a trusted source for timely information about current market conditions. They want to interact with us in a fast, fun and easy-to-use environment. We must be credible; we must be authentic. We need to help them manage their expectations about what they’re buying. They want their information now and they expect us to be mobile. The business of the future belongs to those who are willing to step forward and integrate these innovations in their business.

Perhaps this seems like a tall order for an industry that has been slow to adapt to the Web. If Craig Newmark believes Web 2.0 may be the vehicle for peace in the Middle East, then is it too much to hope for that our industry will embrace these changes to create an entirely new way of conducting business in the 21st century?

Bernice Ross, national speaker and CEO of Realestatecoach.com, is the author of “Waging War on Real Estate’s Discounters” and “Who’s the Best Person to Sell My House?” Both are available online. She can be reached at bernice@realestatecoach.com or visit her blog at www.LuxuryClues.com.

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