Financial market woes and Sonoma County real estate

Financial market woes and Sonoma County real estate.
The effect of the sub-prime financial market and mortgage company problems have been extensively analyzed and discussed. I, however, would like to add my perspective as to how the national problems could impact Sonoma County"s residential real estate. Let me give you my version of how we got to where we are today. As we know, the Federal Reserve under Alan Greenspan tried to keep the economy moving ahead after the shock of Sept. 11, 2001 and the stock market debacle of 2002. The Fed accomplished its economic objective by lowering the Federal funds rate to 1 percent in 2004 and 2005 and, concurrently, expanding the money supply. These actions created an enormous amount of liquidity in the system, the magnitude of which had not been seen in decades. Enter the creative army of mortgage originators, investment bankers and hedge fund managers who could not pass up this opportunity to make huge profits using very cheap money.