Never has it been more advisable to use a realtor who really knows the markets of the neighborhoods they work in. In the Calabasas, California area, one of the places Millennium Real Estate Services serves, there are several microclimates that only a realtor would know when working with a prospective buyer. Millennium offers BPO & REO services, and recently we sold two REO’s and did some BPO’s where the properties were within several miles of each other, but in different “microclimates.”

In one nearby area, with a significant number of sales not to be a statistical fluke, the home prices actually went slightly up. Stable to rising home prices, imagine that. In the other area, over 50% of the sales are REO’s. The untrained eye wouldn’t be able to tell the difference, the properties looked the same, foreclosed or bank owned wasn’t on all the signs. It would be imperative to know in negotiating. In the REO market you know you are talking more of a risk, and more of a possible opportunity. Which is the better buy? As always, that depends on your current situation, and what you are purchasing a property for, and that’s where a knowledgeable realtor best serves you.

What should the savvy home buyer do when there is blood running in the streets? Buy, buy, buy! Now is the time to buy, because the market is depressed and all the sellers are running for cover.  If you're looking to buying a house then now is the time to contact your real estate agent and have them start looking for a foreclosed or distressed home. Depending on your credit and job situation it may be difficult to get a mortgage. With a lot of banks failing because of unethical lending practices, it is making it more difficult to acquire a mortgage in this buyer's market. But, there are still people out there with money, and there are still people out there that can qualify for a mortgage. If you are one of those people, then now is time to buy while there is "blood in the streets." As always, when you are looking at a house/investment, be sure to cover all of your bases and protect yourself.

On a personal note, the REO’s I’m selling in Southern California are getting MULTIPLE OFFERS, and one house in the North Hills area in the San Fernando Valley that was listed for $385,000 had eight offers, was on the market for all of eight days, and sold for $420,000.  Two REO condos I had in Calabasas, California, were both on the market for less than a week with multiple offers.

Sure, times may be hard, but for the savvy home buyer, that’s when things are the best.

Wm. Moran

The government lowers the federal funds discount rate which is the rate that banks borrower money from each other. This is short term which is why when the fed lowers the rate home equity lines and car loans etc... may come down.  Mortgage rates however are traded in the open market and not set by any bank or the federal govt.  Typically investors buying mortgage loans will set their price (interest rate) based on what similar investments may pay. Historically this has been the 10 year bond market, although recently since investors have been more frightened of mortgages in general they have not always followed the bond market either.

It can all sound a bit overwhelming, but the best way to explain it is good old fashioned supply and demand. Right now there is not a lot of demand for mortgages so the rate goes up to make it more attractive to buyers.

Sure, housing's in a hole. But there's a potent case for buying now, whether it's real estate or stocks. Famed money manager Peter Lynch is perhaps best known for his timeless wisdom that you can beat the pros by focusing on stocks of companies where you either work or shop or have some other edge. But a more relevant Lynchism today is this gem: Ignore the headlines.

That's no easy thing. How do you tune out all the chatter and ink on reces­sion, housing, subprime woes, the credit crunch, rogue traders, insolvent bond insurers, $140 oil and nukes in Iran? It's enough to make you sit on your thumbs and wait before making any big moves. But what, exactly, are you waiting for?

There has rarely been a moment in history when you couldn't scare yourself into doing nothing. And yet, as Lynch ob­served nearly 20 years ago, "in spite of all the great and minor calami­ties that have occurred ... all the thousands of reasons that the world might be coming to an end-owning stocks has continued to be twice as re­warding as owning bonds."

A top reason to not buy stocks, in Lynch's view, is if you don't already own a home-in which case, that should be your first investment, since an owner­ occupied home is nearly always profitable. Through a spokesman, Lynch reaf­firmed these views to me­ housing debacle and all.

When prices are falling, few people have the discipline to buy stocks, a house, gold, art or any other asset. But those who do pull the trigger excel in the long run. As John D. Rockefeller famously said, "The way to make money is to buy when blood is running in the streets."

And the streets are strained with crimson. Start with stocks. They have been pummeled this year. GDP braked sharply last quarter, and there has been plenty of panic about a recession. The Federal Re­serve is slashing short-term interest rates at the fastest clip in decades. But if you stick to your steady, diversified plan while everyone else is retreating, you will be happy years from now. For one thing, Fed rate cuts always lift the economy eventu­ally, and the stock market typically starts responding just as headlines get gloomi­est. Sure, the market could fall again be­fore recovering. But the recession may be half over already-or we may avoid one altogether. You just never know.

As for housing, certainly some skepti­cism is in order. Formerly sizzling markets in Florida, Nevada, Arizona and California probably haven't seen the worst headlines just yet, though they may well be close.

And "jumbo" mortgages, those more than $417,000, are likely to remain artificially high for a few more months while banks work through their credit issues. But let's say you are emotionally ready to be a homeowner. You have good credit, plan to stay put for five years and have been waiting for the perfect entry point. It's time to get serious-before an inevitable rise in interest rates wipes out your advantage. "The thing that will make home prices stop falling is the very same thing that will push mortgage rates higher," says Jim Svinth, chief economist at mortgage firm Lending Tree. So any­thing you gain by a further drop in prices might be offset by rising financing costs.

Consider a typical home that sells for $218,900. You put down 20% and get a 30-yearfixed-rate mortgage at today's rate of 5.5%. Monthly principal and inter­est come to $994.31. Let's say that 12 months from now the same house goes for 10% less, or $197,010. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage costs rise just half a point, to 6%, your monthly payment would be $994.94 and you'd have saved nothing. Mean­while, home prices might steady and sellers might become less willing to nego­tiate. And you have spent a year living someplace you'd rather not be.

It's more complicated if you must sell before you can buy. But that logjam won't persist forever-and if it ap­pears you'll be trapped for a few years, try to refinance at today's lower rates. Risks al­ways seem most acute when headlines give you ulcers. But that's exactly when you should think long term - and get off your thumbs.