Fed Holds Steady With Short Term Rates - 2%

As expected, the Fed held steady keeping the central bank's short term interest rates at 2%.

The Fed warned that the inflation outlook remains "highly uncertain" but also indicated that problems in the credit and housing markets, as well as high energy prices, are likely to hurt economic growth over the new few quarters.

The Fed also dropped language that it used in its last statement about downside risks to the economy. In June, the Fed said those risks "appear to have diminished somewhat."

Some economists saw the absence of that phrase in Tuesday's statement as a sign that the central bank is growing more concerned about a deeper-than-expected recession.

-Money.cnn.com

With the housing market turmoil, high oil prices (even though there has been significant downward pressure on pricing per barrel over the past week), and inflation worries, I believe the Fed will not take any drastic measures for the foreseeable future.

What Real Estate Markets Are You Investing In And What Strategies Are You Using?

Share with us the different real estate markets that you are working in and why. Let us know the different real estate investing strategies that you are having success using.

We are currently focusing efforts on light rehab projects in the greater Phoenix, AZ market. Due to large inventory levels, values are becoming increasingly attractive and, aggressively priced, these homes are attracting buyers.

Update August 24, 2008: We purchased another real estate investment home from the public Trustee auction. This rehab project should be completed and ready to be listed by September 1, 2008!

In the near term, we believe real estate investment opportunities will continue to exist in the greater Phoenix, AZ area since there are many bank owned homes and foreclosures still to work through. As a result, this continued pressure will force sellers to be aggressive with their pricing especially if their home needs work.

We also believe that the sharp price declines that have been occurring over the past year will begin to slowly equalize. Take your time finding the right investment opportunity. They're definitely out there!

Update September 21, 2008: We continue to believe, despite the current financial crisis, that the sharp price declines will continue to slow. We also feel that you should continue to take your time looking and evaluating real estate investment opportunities as the markets try to workout the turmoil. There are great opportunities but there is no need to rush as strong opportunities should continue to be widely available over the next year!

The Fed’s Dilema

I believe the Fed will indeed hold tight, neither raising nor lowing rates, since they are caught between inflation and further economic pressures to control a steadily weakening US economy.

Update August 24, 2008: It now looks like real estate is going to remain challenging in many markets through the remainder of 2008 and through at least the beginning of 2009. Fannie and Freddie are at all time lows in regards to their price per share. With the current economic challenges and an election year upon us, I still believe the Fed will not adjust the Fed Fund's Rate leaving it at 2.00%.

Fed Funds Rate - Where Are The Rates Headed?

Update August 24, 2008: The fed remains between the proverbial "rock and a hard place" in regards to the rates as there continues to be downward pressure on real estate, further deterioration of the overall US economy, and inflation is beginning to rear its head!

Update September 9, 2008: Jobless claims continue to rise. The unemployment rate rises to 6.1%.