Real Estate is Back

Walker, Lewis J.
June 1996
Journal of Financial Planning;Jun96, Vol. 9 Issue 3, p30
Academic Journal
This article discusses the revival of the real estate business in the United States. The country is in the early stages of a major monetary shift that has significant implications for asset allocators and investment advisory strategists. In 1979, with inflation and leveraged debit formation at stratospheric levels, President Jimmy Carter selected Paul Voicker as Federal Reserve Bank chairman. In his first five years in office he raised the interest rates to exorbitant levels. Investor expectations shifted. Lower rates of interest and inflation compared with the 1970s rewarded paper investments. Government also lowered the boom on real estate with its little-known law enacted by Congress, greater in its impact than even the Tax Reform Act of 1986. It was called the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). Banks have now built up enough cash to meet the rigid requirements of FIRREA. Lenders are beaconing lenders again. Recent reports show rising lending activity nationwide. The coming real estate recovery will catch many investors and advisors by surprise.


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