Bill Gross, of PIMCO, the authority on bonds, says that the path to recovery is where this financial crisis started; the housing market. While most analysts forecast a continuing decline in housing prices for the rest of 2008, the severity of this decline will impact the spending power of many individuals. Many individuals hold the majority of their wealth in homes and in the last couple of years we have seen a significant decrease in that wealth, however the decline in housing prices and the Fed's willingness to cut rates has lowered mortgage rates. This will make buying homes more attractive therefore decreasing homes for sale on the market. At the same time, these new homeowners are getting in at lower prices which creates the opportunity for high wealth creation in their homes. The 30 year mortgage rate is the home financing unit of choice and the lower this rate goes the quicker we will get back to a more stable economy.
Bill Gross offers more opinions on the dollar, muni's, Fed actions, etc. Click the title for his investment outlook.
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