This month has been a roller-coaster ride in politics, government, finance and weather.  I hesitate to ask the question, "What more could happen?"  So I won't.  But I will offer some suggestions as to where real estate is going. First of all, Wall Street doesn't have a hangover, it is suffering from delirium tremens. Enough of the diagnosis.

When Fannie Mae and Freddie Mac collapsed, and the Federal Government put the Federal Housing Finance Agency in place as a conservator, one of the immediate effects was that mortgage interest rates fell.  That trend may be ending - or not.  With successive collapses of investment banks Lehman and Merrill-Lynch, and insurer AIG, the toxic dust has obscured just what might be left of the investment banking industry, those folks who made subprime mortgages investment-grade bonds. 

Will all this financial rubble affect the real estate market?  It already has, but largely in a psychological sense.  Remember, it's the stock market that lost 4+% of its value in one day (twice this week, as a matter of fact).  That has scared a lot of investors.  But if home owners were losing 4% in value every day, they would be marching on Washington.

Money is moving out of equities and into Treasury bonds, driving down the yield.  It is a further step for money to seek out higher returns as can be had in mortgage securities.  However, as we know, there are fewer bold bankers out there to securitize home mortgages - but it will happen.  While financial terror is abroad in the land, financial institutions are scrambling to find ways to make money. And they will find ways.

The real estate market in the hardest-hit areas was showing some inprovement over the past two months.  The Central New Jersey market, never really hit like markets in California, Florida, Arizona and Michigan, as been chugging along.  The collapse of investment banking will affect our market, with employees of those institutions feeling shakey in their jobs if they still have them.  However, the impact will be relatively mild.  Right now, information is anecdotal, and only when we see September numbers for the whole month, and October as well, will we be able to say that we dodged the bullet (or took one to the head).

And, by the way, there is an election coming up, if you didn't hear.  Each political party's partisans believe that theirs is the party that will solve everything.  Or conversely, the other party will destroy America.  Let's be frank - neither party will be able to make substantive change for at least three months after the election, and maybe not even then.  Buyers and sellers who wait for the election to be decided, or for the inauguration to take place, or for the first piece of meaningful legislation to be passed, themselves will be passed by the real estate market.

Central NJ real estate is stable right now.  There are good homes to be found at reasonable (not bargain-basement) prices.  If you're buying or selling, talk with someone who knows the market.