Deja Vu in 2008?

Is it deja vu or is 2008 shaping up to look extremely similar to 2001? If you’ll recall, in 2001, we’d just gone through the bursting of the Tech Bubble and the economy was sliding into recession. The Federal Reserve started lowering interest rates and the number of home refinances soared. Are we going to see this cycle again?

Well, it’s anyone’s guess but one thing’s for sure, interest rates have been steadily falling over the past two months. Most borrowers with good credit can expect to get a 30-year fixed rate in the mid 5%s. And, as the Fed lowers short-term rates, it’s my guess that long-term rates will follow (probably not at the rate we saw in ’01, however).

Not to mention that the 5 years after ’01 were some of the best years on record for home purchases. If history is any indication, we should start seeing an increase in purchases by the end of 2008.

The real estate industry has been turned upside down over the past 12 months and it’s been an interesting ride. I look for 2008 to be just as fun as we deal with the potential recession and I’m interested to see how the government handles it this time.

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