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“Bernanke to Home Builders… WE HEAR YOU!”
By Sherman Ragland | August 31, 2007
The Annual Kansas City Federal Reserve “Boondogle” trip to Jackson Hole, Wyoming has sent more ripples through the finance commnity. This time however, the ripple are good…
Federal Reserve Bank Chairman Dr. Ben Bernanke told the group that “…The Federal Reserve must take the effects of recent financial market disruptions into account in setting monetary policy and is ready to act as needed to ease their impact on the economy”
Meaning: “We Know We Need to Lower Interest Rates, and We Are Prepared To Do So, When Appropriate”.
These comments come EXACTLY 24 hours after Ara Hovnanian, CEO of K-Hovnanian the Nation’s 5th largest home builder, announced that he and a group of CEO’s of the Nations LARGEST home builders would be in Washington DC on Tuesday of next week to meet with Dr. Bernanke. Their TOP Priority was to ask the FEDERAL RESERVE to CUT Interest Rates and restore stability to the Capital Markets and calm the Mortgage markets to facilitate the recovery of the home building industry, which was occuring up until BLACK FRIDAY.
Many people have asked why Bernanke would even meet with the Nation’s homebuilders and even consider such a request from just one industry group?
Simple: The housing, or more precisely, the home building industry has “tentacles” that feed many parts of our economy, according to Hovnanian – He’s Right!
It is well documented about the “MULTIPLIER AFFECT” of residential home building.
No homebuilder builds a home today that does not include new appliances, and other BIG TICKET Items, and…
No one moves into home without also buying furniture, making additional changes, swapping out fixtures and buying paint, and of course…
BiG SCREEN TV’s 
If you add up the contractors, the staff of the homebuilder, the Realtors (if someone is buying, someone is selling…) the mortgage brokers, the sales team at Sears, Myer Emco and Home Depot, the purchase of a new home involves no less than 30-40 lives and a lot of money flowing through the system.
A healthy home builder market is good for everyone.
Dr. Bernanke realizes (too well) that in order to have a healthy home building market you have to have a stable credit market with “reasonable” interest rates.
Let’s hope that Dr. Bernanke’s comments today really do reflect what he and the other Fed Governor’s plan to do…
A rate cut will mostly be “psychological”, but when it comes time to get the herd to stop stampeding, sometimes just a little “psychology” is all thats really needed.
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Tags: ara hovnanian, ben bernanke, black friday, federal reserve, homebuilder, home depot, k hovnanian, mortgage brokers, mortgage markets, sherman ragland
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