That’s an interesting question. Well, first off, when the Fed decided to start lowering rates their intent was to mainly stimulate businesses to borrow and invest in their R&D, raw materials, etc. The byproduct which I still question if the Fed had the foresight of this is cheap money for the consumer to borrow for Real Estate, Cars, etc. I believe that there has always been creative financing out there however, this has been the largest push in exotic financing in a very long time.
To answer your question specifically, I personally think that the downtown boom wouldn’t have happened like it did. Most of the buyers down there were either speculators or first time buyers who could only pull the purchase off via adjustable loan, I/O loan & 80/20’s. If they had been required to put 20% down and obtain a 15 – 30 year fixed mortgage, I’d bet most of them couldn’t have done that. The building of Petco park was the backbone of the downtown buzz. Developers realized the opportunity and embraced this. Cheap money, loose lending standards and media hype were the only reason that downtown really took off.
