%26#8220;Blood in the streets!%26#8221; Ms. Gable said cheerfully. %26#8220;That%26#8217;s the best time to buy.%26#8221;They are in their early 30s, expecting their first child, looking for something with a bigger family room that is also a little closer to Ms. Gable%26#8217;s job with Volvo Parts North America. %26#8220;We%26#8217;re willing to take a chance,%26#8221; she said.With the goal of encouraging many others to make a similar gamble, various arms of the federal government swung into action this week. The Federal Reserve sliced interest rates by the largest single amount on record, while the House and President Bush forged a $150 billion stimulus plan. To prod the moribund housing market on the high-priced coasts, the aid package includes provisions that should make it easier for consumers to get mortgages up to $600,000 or more. Susanne Cannon, the director of the Real Estate Center at DePaul University, said she was at a conference in Florida this month with other academics who specialize in housing. %26#8220;The informal consensus was that an awful lot of people have been waiting to buy a house because they want to see where the floor is,%26#8221; she said.This week, the average 30-year fixed rate was 5.48 percent; the rate was approaching 7 percent as recently as last summer.Now that lower rates are a factor, Ms. Cannon said, the question becomes: At what point will buyers be compelled to act, thinking they are getting a price they can live with and a rate they do not want to miss?One indisputable effect of the Fed action is a rise in refinancing applications, continuing a trend that started late last year.The New York Loan Exchange, a marketplace used by mortgage companies and the investment banks they sell loans to, experienced a big spike in activity starting Tuesday as loan officers logged on to see if they could get lower rates for borrowers.John Alexander, president of the exchange, said the demand and his conversations with lenders indicated that many borrowers were hoping to refinance but had been unable to do so because lenders%26#8217; credit standards had tightened significantly.Purchase applications are a different story. The Mortgage Bankers Association said they rose a mere 7 percent in the two months leading up to the rate cut. Kimberly Raber, a sales assistant at a pharmaceutical company, is doing her best to raise that number. She lives in a cramped apartment in Vista, Calif., with her fianc%26#233; and their two children. For six months, they have been looking for a bigger place. Ms. Raber liked a three-bedroom condo, but repeated negotiations with the seller yielded only a stalemate. He would not go below $377,000, and she could not go above $363,000. %26#8220;Now that the rates have gone down, we%26#8217;re hoping to meet in the middle,%26#8221; said Ms. Raber, 36.In Atlanta, Jerome Anderson, 43, said he saw on TV that interest rates were dropping and said to himself, %26#8220;Now%26#8217;s the time.%26#8221;He said he planned to invest %26#8220;probably about $400,000%26#8221; into three duplexes in the transitional neighborhood of Vine City. %26#8220;The rental market is very hot,%26#8221; he said. %26#8220;That%26#8217;s my plan %26#151; to buy cheap, rent to families cheap.%26#8221; Mr. Anderson%26#8217;s agent, Otha Greer with Coldwell Banker, said he was not alone. The drop in rates %26#8220;has lit the fire in my business,%26#8221; Ms. Greer said. %26#8220;I actually had an investor that called yesterday and she%26#8217;s interested in buying five homes.%26#8221; Among sellers, too, the cut is inspiring flickers of optimism.Jody and Nicholas LeCursi tried to sell their home in Jackson, Mich., for two years. The initial price was $102,000, which produced no nibbles. Switching agents and lowering the price to $98,000 did not help.In October, they took the home off the market so they could remodel a bathroom and bedroom. When the work is done, they said, they will try to sell the home again, probably at a lower price. They calculate that a buyer could pay as little as $700 a month. %26#8220;Why would someone want to rent if they could own and pay the same thing?%26#8221; asked Ms. LeCursi, who works in rehabilitation at the University of Michigan in nearby Ann Arbor. %26#8220;People need incentive. Hopefully, that rate cut will supply it.” Such is the depth of the downturn, however, that for many, the incentives are not enough. 1 2 Next Page %26#x00bb;Vikas Bajaj contributed reporting from New York, Brenda Goodman from Atlanta, Will Carless from San Diego and Joan Raymond from Cleveland.
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