Nearly a month has passed since the terrorist attacks in New York and Washington, and since a plane was lost in Pennsylvania. The U.S. is now a very different place when compared with a month ago -- and yet much is the same.

The stock market, as one example, has recovered much of the ground lost after September 10th -- not all of it, but a lot. The market closed at 9,605.51 on September 10 and 9,067.94 yesterday. Yes, the market is down from September 10th -- but it's also up significantly from 8,235.81 finish seen on September 21st.

The consensus seems to be that real estate sales will ease during the next several months, but not much. Prices are expected to increase at an annualized rate of 2 or 3 percent through the first quarter of 2002 -- that's less than the appreciation seen in the past few years, but more than the rate of inflation we are likely to see. In effect, holding real estate will continue to be a source of real wealth for most owners.

All of which brings us to the idea of risk. If it took so much interest to lure investors into the government bond market before September 11th, what will it now take? And if we agree that government bonds are the most secure form of investment, what will it take to attract investors with stocks, IPOs, junk bonds, gold, and property?

No one has a precise answer, but the usual equation is that more risk equals investor demands for higher returns. And since we now have a period of more risk than in the past decade, one can argue that interest rates should rise.

Alternatively, one can argue that even though we have more risk, interest rates may actually fall. Why? Because more people will want to place their money in the safest possible investments, only so many bonds are issued, thus there will be strong demand and limited supply.

Another reason to argue for lower rates is that the economy is remarkably solid. Factories continue to produce products, children go to school, the malls are open, homes are sold, and new mortgages are written.

It's true that we now have a war on our hands. But we were at war before September 11th. Blowing up embassies and attacking a naval vessel were and are acts of war.

What we are about to see is a debate waged with dollars rather than words. The question is: Do changing times justify higher interest rates for bondholders and represent greater risk for investors?

In terms of real estate, if you answer "yes" then you can expect significantly higher mortgage rates and fewer housing starts. A "no" suggests maintaining much of the status quo which means a moderate fall-off in unit sales, 2 to 3 percent price housing appreciation over the next year and 1 percent inflation (or less).

In this particular case, I'll opt for a "no" vote. I expect the country to go along more or less as usual, I'm elated with the conduct of our politicians, and I am reassured by the thinking and strength of our military. A national concensus has plainly formed, and I think it would be foolish to bet against it.

For more articles by Peter G. Miller, please press here.

Published: October 9, 2001

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Peter G. Miller, also known as OurBroker®, is the author of six real estate books -- including The Common-Sense Mortgage -- and is the original creator and host of America Online's Real Estate Center. Peter's weekly columns appear in more than 100 newspapers nationwide, he is also published in a variety of other media outlets and he is a frequent speaker at national events and conventions. Peter welcomes your questions, comments, and news releases via e-mail at .