Reflecting on the Past, Emerging into the Future

We are still standing tall, as we endure another round of economic challenges brought forth by the mortgage meltdown that began in 2007. Many of you recall that I entered the real estate market in 1973. It was at the time of the OPEC oil embargo and a recession characterized by high interest rates and high inflation.

By 1975, the market began improving. Real estate sales were robust during a massive inflationary cycle that lasted until the 1979 energy crisis. We were facing gas lines that kept people waiting in line every other day for hours, surviving through inflation that eventually reached almost 15% and lasting through a double dip recession. The Prime interest rate reached 21.5% in 1982. At the end of 1984 momentum was regained in the real estate market.

We pulled through the 1989 to 1994 recession when deregulation contributed to the death of the savings & loan industry and the country shook when it choked on the $500 billion bailout. Once again, recovery was spurred by inflation. Then again in early 2000 the economy waivered in response to the bursting of the dot.com bubble. The primary victims of that market crash were the dot.commers, while the real estate market escaped with minor turbulence. It was around that time that sub-prime loans were making their way onto the market and the beginning of real estate value’s inflationary and seemingly unending climb into the stratosphere.

As I look around today, I see most of my industry colleagues have been brought to their knees by this great recession and it’s like déjà vu. There doesn’t seem to be a lot of us that are making it through this round. I am guardedly optimistic when I read in the news that our economy has or is hitting bottom and is beginning its gradual climb back to normalcy or dynamic growth. Whether dealing with a real estate market that has seen significant devaluation, vindicating ourselves and shouldering the expense of ongoing attacks from a rogue group, or taking on the increased burden of industry wide regulatory reform, Point Center Financial is still standing and will continue to be an industry leader.

We are seeing a glimmer of light at a distance in the form of stabilizing commercial and apartment real estate values, and stabilizing rents. New tenants plus rollovers are causing slightly positive absorption. At this point in the cycle, banks and institutional lenders continue to severely constrict their lending activities. This has provided an opportunity for private money lenders to make loans on improved income producing property, with stabilized occupancy and stabilized rents, which would have otherwise been funded by a bank.

Point Center Financial is renewing its commitment to provide investment opportunities with projected returns exceeding most other traditional investment vehicles. It is beneficial to also be meeting the financing objectives of commercial property owners in this tight money market. We continue to hold our heads high and are pleased that we are moving forward to originate new trust deed secured investments. Here’s to the future of American capitalism and a return to better days.



Dan J. Harkey
President, Point Center Financial, Inc.