Mortgage rates did go down this week because more economists are predicting further moves by the Fed. From here, good economic news such as we saw on Friday in the form of orders of durable goods and new home sales is actually bad news for the real estate market. If it looks like the economy is slowing, then the Fed will be more likely to act. Before they meet again, economic releases will include an adjustment to the picture of second quarter economic growth and the employment report for August.

Does the rock-solid bulwark of property valuation - the CMA - still have a place in this fluid market?

You Bet. The Comparable Market Analysis, or as some call it, Competitive Market Analysis, is based on past sales of similar properties, and that data is extrapolated to forecast current value. If those sales are recent, say within the last quarter, then the CMA is credible.

The caveat here is that those sales must reflect the current local market conditions in order to be viable. So if a neighborhood's general property values are trending downward, then the CMA must be adjusted to reflect that value slide.

Conversely, in a neighborhood with stable or rising values, the sales prices of recent sales are probably still valid. So are there really any good deals left out there? Absolutely. The speculative residential real estate market has stabilized, of course, and the wildcat market of the last few years has certainly slammed on the brakes. But does that means there are no good deals left?

Nope. With unsold property inventories higher than they've been for years, and with lenders very cautious about making risky loans, there has been downward pressure on sales prices. Sellers are slowly realizing that their asking price has to come down significantly. In order for sellers to get their price they must offer attractive terms to buyers, paying closing costs, or carrying some short term paper for instance. For those investors who have good negotiating skills, there exists a unique opportunity to acquire properties in this down turned market.

The investment strategy in today's market is simple: buy and hold.

Not hardy.  People will always need housing, and so will they need financing.  Folks who have been in the real estate and mortgage business for a while know that market downturns are part and parcel to a cyclical industry as this.  In the last 30 years, there have been recession which adversely impacted the industry, and those were painful to get through.  

But there is no recession in today's market.  Look at how the stock market has set new records over the last six weeks.  In housing, low rates drove high prices, and the speculation simply ceased.  The media played a part in that, too, with constant "housing bubble" breaking stories.  Overpriced homes with negative equity along with escalating ARM loan rates have caused some homeowners to default. 

But that simply creates another opportunity for investors.  Sure, they'll buy low, but they'll also take some risk by putting vacant homes back into the rental pool, thereby providing housing for those who missed the "boom."

We're optimistic about housing and lending in the near term.  The pendulum swings both ways, and the future holds an up-tick.