This post will address the relevance of the Fed after...

This post will address the relevance of the Fed after a further continuation of the 'Saga of Sonnypage', an Atlanta area real estate broker. Sonnypage has this update to share, followed by my thoughts on the Fed, the economy, and housing. Sonnypage was highlighted in Lights Out in Georgia on 2006-07-27 and Soft Market Debris on 2006-08-02. As you can see from the date of Sonnpage's post, this is slightly out of sequence. Here goes from Sonnypage:Sonypage - 2006-07-30Most of the regulars here know that my wife and I are Realtors, a husband and wife team, who practice just north of Atlanta. Our business is still mostly in the towns of Roswell and Alpharetta, but now also increasingly further north, up into Cherokee and Forsyth counties, and up to Hall County on Lake Lanier. Our price range is all over the board, from a low within the last year of $125,000 and a high of $1,250,000. We are strictly residential, no commercial. We have incorporated ourselves, but are still independent contractors, as are most Realtors. We are also affiliated with one of the major national franchises whose name everyone would recognize. On Fridays, if we are near the office, it's “Thai Thai” day. There is a Thai restaurant down on the terrace level of our office building. This past Friday, Rick, one of the primary mortgage lenders we work with, was in our office, so we invited him to join us for lunch at the Thai Thai. We are mostly talking real estate as you would expect when you get Realtors and lenders together. His question was, “How are your listings doing?” I shook my head and explained that we had ten, just this week lost two, but will pick up another next week. Nothing is selling, and if we do get one under contract it may well fall through before closing. Rick nodded and said that's exactly what he's hearing with every Realtor he talks with, and he talks with plenty. In a normal year, I then explained, if I had nine listings on August 1st I would be feeling great. I would anticipate that six or so would close by year end, probably six or so buyers would also pop up, that's a dozen deals, a great finish for the year. This year, who knows? Contemplate this if you will. Most of those who work in my industry are fee based, not salaried. If I close a listing, they hand me a check. But it goes much further than that. If I don't put a buyer under contract, then the home inspector we use does not get a call to come inspect the home. Rick, our mortgage lender friend, does not get a call to arrange a home loan. David, our handyman, does not get a call to come out and make the agreed to repairs. Usually a pre-closing involves painters, perhaps a carpet vendor, and others. They never get a call if there is to be no closing. Jennifer, our closing attorney, does not earn a closing fee. Does she start to lay off staff when her closing volume drops sharply? Yet if a government bureaucrat drops by to ask if we are employed, well yes, most of us are. We are earning a fraction of what we normally earn, but employed we are. My wife and I are fortunate enough to have been able to save during the good years, but I assure you that most Realtors, and others in related industries, live check to check. Spending will surely fall sharply, probably already is doing so. I am one Realtor. The NAR claims a membership of 1.3 million. Multiply the train of events I portrayed above by a factor of 1.3 million. It's not a pretty picture. Bernanke faces an interesting dilemma. Does he continue to raise rates to keep inflation in check and defend the dollar? Do that and you get, imho, a catastrophic housing related recession in this country, and very soon at that. It may already be baked in the cake. If he pauses in August, and continues to pause, does the dollar fall, perhaps precipitously? That will indeed generate inflation, because the cost of imports, including oil, will rise. I am very long gold. I need to post soon, and will, about the dilemma of our sellers, our listings. That also, in many cases, is not a pretty picture. Everyone have a great week. SonnypageMish:Reality has set in for Sonnypage. To his credit he is not denying the truth. What supposedly could not happen in Atlanta, seems to have happened, and like a shot out of the blue too. The 'best year ever' that Sonnypage had in January and February may turn out to be one of his worst year's ever. So what happened?