It looks like they will keep their policy more vague too – from the wsj.com:
The Federal Reserve could signal it is likely to keep short-term interest rates near zero into 2014 or beyond, to bolster the fragile economic recovery.
Fed officials have grown increasingly uncomfortable with their August statement that they are likely to hold short-term rates exceptionally low at least through mid-2013. Some believe low inflation and high unemployment could warrant low rates for longer.
Updating the view on rates has become an important part of Fed discussions about how the central bank explains its goals and policies to the public. Officials could agree at their next policy meeting Jan. 24-25 to a broad revamp of their communications.
When the Fed revises its communications approach, there is a good chance it will cease offering a fixed date for the timing of rate increases. Instead, officials could signal their intentions by publishing a range of their forecasts for rates along with their quarterly economic projections. Some officials see this approach as one that would be easier to update and would better link the Fed’s guidance with its outlook for the economy.
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Without the fear of rising rates, buyers will be content to wait for a good price.
But will those who have been searching for years pay a little more to end the frustration?
It is the only reason that prices might tick up, and by now those folks must be thinking that they have come this far, they aren’t going to settle.
Welcome to Japan. Low rates for far longer than anybody anticipated. Maybe the housing market goes the same way. Continues to drift down slowly while everybody screams the bottom is almost here.
Long time buyer-to-be here. To put into context I moved back to SD in 2002 after living in Europe for several years….I thought the prices where CRAZY in 2002 (compared to income) and started to dig for answers. I watched from 2002 onward…waiting…and waiting…and waiting…for the pop.
Fast fwd 10 years later! Last week (for the first time ever) I called Wells Fargo to find out my loan options. I don’t have a house in mind, but I will buy soon. I figure I have a year or 2 of time before rates tick up……but I am not going to try and time the bottom of rates/housing prices perfectly.
It took 10 years of waiting but the perfect storm of low rates and low prices here here.
Caption contest for Helicopter Ben:
“Zero percent FED rate is my preciousssssss!!!”
Inflation is going to happen. You’ve got…
1. Bankers that need to unload assets at the highest possible price. High interest rates = low sales price. Low interest rates = high sales price.
2. Republicans that think low interest rates are helping people.
3. Democrats that think low interest rates are helping people.
Our government and fake fed gov has become so short sighted that there’s no way we’re going to avoid inflation. Just remember when inflation hits those with assets (houses, investments, stocks, etc) will do very well. Those living paycheck to paycheck or without a large number of physical assets are going to get screwed. Expect to see grandpa and grandma working into their eighties or longer.
Make hay while the sun shines people. Buy now and lock these low low rates in for the next 30 years (ask your parents how this works because inflation IS coming to state near you)
“Inflation is going to happen.”
Why are we so sure inflation is going to happen. Demographics would suggest there’s a massive desire by the boomer population to acquire assets and future generations debt to fund their retirement. In late 1970’s and early 1980’s the boomers where massive consumers driving the price of debts up, now the exact opposite is happening. If everybody but the assets holders are broke who exactly is going to trade their future productivity for those assets.
The vast majority of stored wealth is somebody else’s debt. If you destroy debt you destroy the wealth. The producers of goods and services in the economy are the only ones in control of their destiny. Those relying on assets and debts to fund consumption are the ones that are screwed. The producers can chose not to honor their debts and assets are only an option after they’ve taken care of themselves and their family. You’re going to chose to eat and live somewhere before you buy somebody’s stock.
Yes low rates were supposed to redirect investment from bonds into equities and housing to juice (inflate) those markets but instead people stayed away from them and just lived with real neg bond returns in exchange for safety while equities were flat and housing down for the year.
Unemployment is terrible and inflation only came in the form of food and energy increases while wages didn’t keep pace, both of which are a real problem if you expect regular families to buy housing and hard assets (ex gold). All inflation is not created equal and the return of housing inflation has proven to be alot more complex then simply low rates.
Without the fear of rising rates, buyers will be content to wait for a good price.
Heck, I’m *waiting* for higher rates because I know they’ll send prices diving to new depths.