Date	1 Mo	3 Mo	6 Mo	1 Yr	2 Yr	3 Yr	5 Yr	7 Yr	10 Yr	20 Yr	30 Yr
09/01/11	0.02	0.02	0.05	0.10	0.19	0.31	0.90	1.49	2.15	3.10	3.51
09/02/11	0.02	0.02	0.05	0.10	0.20	0.33	0.88	1.41	2.02	2.92	3.32
09/06/11	0.02	0.02	0.07	0.13	0.21	0.33	0.88	1.40	1.98	2.86	3.26
09/07/11	0.00	0.02	0.06	0.11	0.21	0.34	0.92	1.45	2.05	2.96	3.36
09/08/11	0.01	0.02	0.07	0.12	0.19	0.33	0.88	1.41	2.00	2.92	3.32
09/09/11	0.00	0.01	0.05	0.11	0.17	0.31	0.81	1.34	1.93	2.86	3.26
09/12/11	0.01	0.01	0.05	0.11	0.21	0.35	0.87	1.38	1.94	2.84	3.24
09/13/11	0.00	0.01	0.05	0.10	0.21	0.35	0.89	1.42	2.00	2.92	3.32

(Daily Treasury Yield Curve Rates)

Can we be reaching a golden age of purchasing real estate? Mortgage rates are falling close to the inflation rate. 10 year T’s are under 2%. The 20 year is under 3%. Mortgage money can be had at 4.5% to 5%. The Fed may be announcing a policy to lower long term rates even further under the program Operation Twist. Inflation for the past 12 months has been 3.6%.

If this dynamic hold true, property owners could receive positive real returns just by holding property. There have been other times like this in the past. Some of the old building owners in the area talk about the mid 1960’s where borrowing rates were still low and inflation was ramping up due to the Vietnam War.

A simpler way to see the benefits of purchasing is when mortgage payments are close to paying rent. For investors, positive leverage is a good buying sign. That is when cap rates exceed the mortgage interest rate. Both cases are occurring today.

The second trend is excellent values or as some say, low prices. A value investor buys when sentiment is the worst. Looking at Califonia today, it’s bad and still getting worse. Individual owners are parting with crown jewels they have amassed over a lifetime. U.S. manufacturers continue to shed domestic operations for growth overseas. This negative sentiment also shows in low rents some owners are willing to accept in order to keep a property leased. When pessimism rules, it’s the best time to buy.

One final condition that makes purchasing a consideration is that there is leasing activity. It’s still clearly a tenant’s market and there is a range of building choices and negotiation options. But unlike the post Lehman period, companies are sizing up opportunities and moving.

Selection needs to be done carefully. Low interest rates can cause inflated sale prices because some buyers purchase for financial reasons and not necessarily for market fundamentals. Using historical cap rates will prevent paying too much. Additionally, in this market, buyers should spend the additional time looking for better sites. Searching for good purchases is still an arduous process.

Realistically, absorption is relatively weak and rents, at least for most typical properties, are still at a low. Additionally, we could be at the cusp of another global financial meltdown. We have already gone through one round of optimism during this recession only to be let down by worsening economic conditions earlier this year. But for being in the middle of a nasty recession there is a fair degree of leasing activity and bankable tenants.

When the Fed is begging to lend money and doing everything possible to get the rates down, those buyers who can fill buildings either by market knowledge or their own businesses should watch the signals. Very low interest rates, continued fear, and a semblance of leasing activity gives a contrarian enough ingredients to make deals.