Why isn’t a bevy of buyers biting the bullet?

 

The yellow line represents the 30-year fixed-rate mortgage from October 1970 until now. (Reproduced with the permission of Mortgage-X.com)

As almost everyone knows, there was a time that mortgage rates soared into the high teens.  I remember it well.

With interest rates as low as they are, I’ve been wondering why buyers in Manhattan aren’t eager to snap up properties with funds borrowed at record lows.  Taking into account government subsidies in the form of tax deductions, how could this fourth quarter’s activity be so relatively sluggish?  (It is, though the Q3 reports may lead you to believe otherwise.)

A poll in yesterday’s New York Times and an account of Ben Bernanke’s big speech last Friday provided me with some insight.