Of course a FOMC rate cut will “help.” It won’t stop what is happening but it will alleviate it to some degree. What that degree is remains to be seen. But to say an interest rate cut won’t help is naive. Help but not a panacea. Perhaps the biggest effect would be psychological. The actual affect on interest rates may indeed be marginal. However, if all of the people stacking up on the sidelines of SFH purchases get the sense that the fed is going to begin a cycle of cutting they may in unison or large portion decide the time to buy has arrived. Not PIGS of course but those prone to believe the bottom is just around the corner and they must just wait a little while more. An interest rate cut may goad them to act and buy. There is no question that there are a growing number of people who eventually plan on buying a SFH in San Diego but are waiting for the right time. When they decide to buy in sigificant numbers, whatever the impetus, it will certainly affect housing to the upside. The biggest affect on housing may be psychological.
