Leroy, the federal funds rate does not control the rate on a 30 year fixed mortage, and that bad boy is the engine of homebuying.

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The feds actions(rate cuts, and all the other stuff they've been doing) may lead the 30-year fixed rate to dip below 5%. And when that happens, it will be a refinance-orama. I'm tempted to refi, but I may have to move in 2 years, and I've already got a sweet 5.375% rate... hard to believe it could pay off to refi, but for people not about to move, it's more likely a good time to refi.

Meanwhile, Leroy, the US is far better off than Japan in this regard. Why?

1. We are heartless. We will bankrupt your businesses and foreclose on your homes rather than let the zombie loan fester on the books.

2. We are net importers. If japan suffers job losses, no amount of "buy japanese" nationalistic sentiment can get the back on track. The US can indulge in populist protectionism during periods of job loss and slow down the bleeding.

3. We welcome immigrants. Consider: most immigrants enter the US an join the bottom quintile. 2nd generation immigrants may claw their way out of poverty and join the middle class, meanwhile, more immigrants flood in to fill in the bottom. the results? a.) prices for unskilled labor is held low. b.) prices for land and housing are driven up c.) quality of life for middle class rises with housing values and cheaper services. Japan is relatively unwelcome to outsiders, and the population remains 98.5% japanese.