NEW YORK — The Sept. 11 attacks on the World Trade Center and Pentagon affected not only America’s morale, but economic stability as well. For a nation veering toward recession, the attacks sparked negative economic repercussions in consumer confidence.
Federal Reserve Chairman Alan Greenspan is trying to combat the economic situation with another half-percentage point interest rate cut, dropping the rate to the lowest level in nearly four decades.
According to Bill Shanahan, executive director at New York-based Cushman & Wakefield, the interest rate would probably have been cut at least a quarter point no matter what. Shanahan said the WTC attack and the resulting job layoffs exacerbated the nation’s weakening economic situation, causing the Federal Reserve to cut rates even more than expected.
This means those in the real estate industry who hold floating rate loans — loans which, depending on the terms, are reset periodically — the interest rates will drop. For example, Shanahan cited a floating rate loan with a secured for a client last October with an interest rate that has nearly been cut in half. The rate cut, he said, could increase consumer confidence and spending, returning the nation to a stablestate.
Another example of real estate’s economic buoyancy in these troubled times is the fact that a Lehman Brother’s real estate fund has raised $1.5 billion. When the fund was started, the goal was only $1 billion.
According to Shanahan, the real estate industry is performing well overall. "Real estate as anwill outperform the stock market," he predicted.