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Low Interest Rates Aren't The Fuel To Drive Real Estate Purchases

The Active Rain Real Estate Network isn't the place for political grandstanding, in my humble opinion.  The fact is that we have to earn our daily bread based on 'What Is,' not 'What I'd Like It To Be.'

That said, it's been awhile since I was able to fill my daily schedule with appointments for individuals or couples who are:

  • excited to get prequalified for the purchase of their new home, or
  • excited because they can take advantage of the super-low interest rates and refinance to get their mortgage paid down more quickly.

Reaction to 'Job Creation' speech

"Stocks Tumble Worldwide After Obama Speech" was the lead headline on Bloomberg at 4:00 a.m.  The fact is that nobody with money to spend on growth stocks (read investors) believes that the President's direction will lead to growth.  The expectation reflected in this morning's opening bell in an hour or so is exactly the opposite.

Federal Reserve "Central Planning"

Pimco's Bill Gross, arguably the yin to Ben Bernanke's yang, went on the record against the Fed (and by extension the financial policies of the current administration) earlier this week in a commentary piece titled 'Helicopter Ben' Risks Destroying Credit Creation.  Click the link for the reasons why.

The fuel that drives success in Real Estate, Construction and Lending is NOT to be found in government management of the economy.  Low interest rates in and of themselves are NOT the fuel that will drive buyers' ability to buy and sell real estate.

The Fuel That Drives Success: Free Market

I was a homebuilder on Long Beach Island, NJ in the 1980s.  I employed as many as 21 FULL TIME UNION CARPENTERS in New Jersey for more than a decade. That's right, UNION Carpenters Local 2118 Lakewood NJInterest rates on home mortgages were 15.825%, my company was working overtime to meet my customers' demand for new homes and remodels of existing homes. 

Neither union contracts nor high interest rates were an impediment to success.  I was free to succeed or fail without government intervention.

If you had told me then that interest rates would drop to their present levels, I wouldn't have believed you.  I was hoping against hope that rates would get back down to the good old days of 12.000%.

So here we are, with an administration that thinks the answer to our economic woes is yet more government debt.  The world doesn't agree.  ...and in my little corner of Arizona, neither do I.

Interest rates don't drive success.  Free market forces that allow risk and failure are the fuel that will turn Real Estate around and let you fill your appointment calendars.

_____________________

I'm Mike in Tucson, your preferred Tucson Arizona Mortgage Lender

NMLS #223495

SUNSTREET MORTGAGE LLC ~ Correspondent Mortgage Bank
Offices in Mesa, Tucson, Sierra Vista & Nogales

Comment balloon 5 commentsMike Jones • September 09 2011 08:33AM
Low Interest Rates Aren't The Fuel To Drive Real Estate Purchases
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