In recent weeks, Streetwise has looked at the divergence ofopinions and perspectives present in the marketplace. There issignificant optimism and pessimism present at the same time so thequestion becomes, Can market conditions actually be positive andnegative at the same time? I believe the answer is yes but it isdependent upon individual circumstances.

There are many indicators in the market which lead us to beoptimistic. Unemployment, the metric which most profoundly impactsthe fundamentals of real estate, appears to have bottomed and weare starting to see job growth. Inflation appears to be in checkand even the most bearish economists don't see inflation as ashort-term problem. Interest rates, while edging up, have notcaused any significant increase in borrowing rates. When the Fedceased its asset buying program at the end of March, we saw upwardpressure on interest rates, particularly at the long end of thecurve as the 10-year T-bill, which had consistently hovered around3.5%, rose to over 4% for a brief period. Last Friday it closed at3.625%, a surprising result after the Fed announced 10 days agothat it would begin a program to sell a trillion dollars worth ofassets over time.

Rental rates appear to have bottomed as well. In both thecommercial and residential sectors, concessions are being reducedand, in a few cases rents are rising. I actually spoke to twobankers last week who told me that they were droppingcommercial lending rates due to the competition with other banks toput money on the street. This, to me, was a remarkable and eyeopening occurrence.

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