rest rate increases. On the one hand, higher costs reduce the pool of potential buyers who can qualify for a mortgage loan. In actual fact, such buyers could qualify for mortgage loans, if they were either able or willing to pay the increase costs for property up front as higher down payments. In most instances, the affected buyers are neither able nor willing. On the other hand, many potential buyers drop out of the market because they are unwilling to pay the higher costs. Higher levels of unemploy ment reduce the pool of potential real estate purchasers who are able to qualify for a mortgage loan.
Federal Reserve monetary policy actions designed to con trol inflation may be viewed as positive factors for real 3estate construction and sales, because such policies cause a moderation in the rise of property prices. Conversely, how ever, such policies often produce other outcomes such as higher interest rate and higher unemployment which are detri mental to real estate construction and sales.
Presidential and Congressional fiscal policy actions designed to reduce the budget deficit may be viewed as positive factors for real estate construction and sales, because such actions tend to moderate both interest rate actions and price inflation. Conversely, however, such actions also often pro duce other outcomes lower levels of government employment, lower levels of employment in the defense supply industries, and lower federal construction spending which are detrimental to real estate construction and sales. Similarly, fiscal poli cies designed to boost employment levels are positive for real estate construction and sales inthe context of employment levels; however, such policies also tend to accelerate price inflation, a factor detrimental to real estate construction and sales.
Fiscal actions related to taxation also affect real estate construction and sales. Policies permitting mortgage interest rate deductions when ...