[Leo the Dog]

Originally Posted by ChargerCarl

I mean, it would slow construction because it would slow all economic production via recession, so no I don't agree with the spirit of your comment.

What don't you agree with? ZIRP being responsible for widespread borrowing/spending/investing creating a RE boom in both commercial and residential? (And stocks).

Boston Fed chief warns of commercial real estate speculation

Low interest rates may be encouraging speculation in commercial real estate reminiscent of the New England bubble in the late 1980s, Eric Rosengren, president of the Federal Reserve Bank of Boston warned Thursday.

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Real estate experts said they are seeing surging demand for Boston properties from foreign investors, looking for a safer, long-term bet.

But some of that demand may be driven by the low interest rate environment, Rosengren said.

“One potential cost to keeping rates too low for too long is that doing so might encourage excessive risk-taking in commercial real estate — a sector likely to be influenced by low borrowing costs,” he said. He added that in New England in the late 1980s and early 1990s, when the bubble burst, borrowers defaulted, lenders were left with half-finished projects and empty towers, and several banks failed.

Interest rates have been at rock bottom since the financial crisis and lenders and investors chasing higher yields have turned to commercial real estate for potentially higher returns. The yield on 10-year Treasuries on Wednesday was 1.73 percent.