The Federal Reserve finally cut the funds rate. My take? It is about time. When September 11 hit, the government did a pretty good job moving to get interest rates down so the whole economy wouldn't implode, and it worked. But when things started to come back to life just a little, they all started running around yelling "inflation" like fire in the theater, and the resulting steady march upward of rates is part of the reason so many are now in trouble on their adjustable mortgages. This is not the place for (nor am I the guy to write!) an economic dissertation on the relationship between interest rates and inflation, but I would like to observe a couple of things that are relevant to the Colorado Springs real estate market from this.

1. Look for some additional easing of mortgage rates, maybe dare we say, below 6%? The funds rate at the Fed is not measured in lockstep with mortgages, but generally lower rates at the Fed seem to find their way into the rest of the economy. This will help the real estate market absorb some of the excess inventory that now plagues us, and maybe even break loose a few more new builds.
2. Look for the upcoming HUD refinancing program to help some, but not all owners who have adjustable rate mortgages. Some of these folks aren't in trouble because the rate has jumped, but because the assumptions they made relative to their own paychecks have not materialized, and the "HUD bailout" program probably won't help them. It will probably help lower some of the key indices that adjustable mortgages are tied to, not an all bad side effect.
3. Look for some wider latitude coming in new FHA loans, with higher loan limits in particular helping supply more choice in financing vehicles.
4. Don't expect this to be any kind of instant fix to the current slow real estate market. This will help, but by itself is not going to be enough. In Colorado Springs at least, bringing some of our boys home from Iraq will actually have a more immediate impact, by creating some demand for housing. That and a few good civilian employment announcements, and we'll be good as new!