A couple of days ago, the Federal Reserve cut interest rates by a half point, which was more than many people who follow the market expected. For real estate agents, it's good news because it could potentially mean that those cuts will trickle down into the mortgage market which would ease some of the strain that is one buyers who can barely qualify for a loan.



With the sub-prime mortgage "meltdown" as it's called still in effect, the lenders have had to drastically tighten up on requirements for borrowers. Now,borrowers must have good (documented) income, good credit score and in most cases they will also need reserves. If the interest rate on mortgages were to drop a half a point as well, that should definitely open up more possibility for those who are on the margins in terms of income. Afterall, the lower the interest rate, the lower the monthly payment.

With more potential borrowers out there, it should help free up some of the Oakland Ca real estate inventory that has been getting up to some pretty high levels compared to recent years. Currently there are just too many homes on the market for the amount of buyers that are able to afford them. At the same time, prices are gently falling in Oakland and many of the surrounding cities.I wouldn't be surprised if we lost 5-8% over the next year or so. Unfortunately (or fortunately depending on who you are) the run we had from 2001-2005 was so great that it created a situation where it will take a little time for appreciation to move in a postive direction. However real estate has been and always will be a long term investment, not a virtual ATM machine.