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The Problems are the Path

The Problems Are The Path: 2025 Starts the Year Off With Carry Over from 2024

 HAPPY NEW YEAR! The year starts out with the California Legislature passing additional laws in the Rental Marketplace.   AB 2493 – Tightens Rules for Application Fee Screening This new law authorizes a landlord or their agent to charge an application screening fee only if the landlord or their agent, at the time the application screening fee is collected, offers an application screening process, as specified. This bill would also prohibit a landlord or their agent from charging an applicant an application screening fee when they know or should have known that no rental unit is available at that time or will be available within a reasonable period of time. AB 2347 – Alters Rules for Eviction This law extends the time in which a defendant, in a summary proceeding for obtaining possession of real property, must file a response from 5 to 10 days, excluding specified days, after the complaint is served on the defendant. AB 2801 – Changes in Security Deposit Rules This law lim...
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The Problems Are the Path: Interest Rates and Future Targets

The FED target for interest rates in two years is 3-3.25%.  There was some upset investors after the last FED meeting that took the Stock Averages down precipitously.  The expectations were there would be a series of interest rates cuts in 2025, that the FED determined would not occur.  Well, what does it matter?  Think about you are traveling  from your home to Lake Tahoe, or from Sacramento to Menlo Park or Menlo Park to Sacramento.  The trip from the Bay Area or visa versa will take 3 hours, give or take 15 minutes.  You can go on via Hwy 5, or 80, or 680, or 580 or some combination of all of them.  But when it comes to arrival you will be there at about the same time.  So why is there the big hullabaloo over how many rate cuts we get in 2025.  You could start out from Sacramento get onto 5 and then there is an accident.  Or you could do the same on 80, another tie up.  Take the cut off onto 680 from 80 and another tie up....
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The Problems are the Path: 2025 Lower Mortgages and Higher Property Values

 Shortly after Trump's election the Census came out with one of their Employment Reports.  My wife, Cindy, once worked for the U.S. Census as a field worker for the reports on employment.  She thought it would be interesting to see how Silicon Valley worked.  The report I am referring to did not deal with the Silicon Valley employees. It dealt with labor force calculations in the best way to describe it, immigrant population employment.   Generally recognised out of the report were laborers in the service industry and agricultural industry.  It was a well known acknowledgement in the footnote, I recall, as that many were most likely non-citizens here on temporary status.  Back in time when I graduated from Wisconsin I did volunteer work for the TB Association searching for positive skin tests for TB on non-citizens who crossed at Brownsville Texas to work in the fields in the harvesting and canning industries.  The Census is stuck on the poli...
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Happy Thanksgiving...or is it?

 It does not seem so long ago that Wall Street, the Euphemism for the place were all savy investment decisions are made, was forecasting consecutive declines in interest rates from the (FED) Federal Reserve Board.  The FED would cut interest rates at every meeting.  Surprise!  The FED comments are that the economy is going too nicely along with inflation at a 2.1-2.3% on an annual basis for us to do so.   Inflation rate may be well and good for the Nation at 2.3% annually, but we here, in California, we have some issues.  While gas prices at the pump have moderated a bit, the taxes that our Governor and Legislators put on gas keep the State of California as the highest in the Nation.  Add to that we have to contend with housing prices the highest in the Nation! Next with all the push on the quality of the air and the carbon issues, the ability to convert to all electric has some road blocks.  The major roadblock is PGE ability to provide elec...
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The Problems are the Path: Year End Comments

The last 2 months of the year are, or were, normally tied to "clean up" work.  Inventory was thin.  The properties that remained on inventory were usually: left overs from the year that have not sold, properties added due to moving or estate sales, and like in prior years from notice of defaults and foreclosure notice.  Buyers were generally on their hunt to find price weakness and reason for the reason WHY these properties have lingered on the market.  The general answer to WHY were they were OVER PRICED from the start.  Either they were overpriced due to condition or comparatives.   From 2020 forward we have had a dramatic change to the Supply/Demand ratio.  The Pandemic took supply from the marketplace.  Whether that the supply was housing, restaurants, workers entertainment and travel.  Everyone was hunkered down in their homes fearful of the infection from others fearing all the horror stories of death.  A Present Day Black Pla...
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The Problems are the Path: "What a Revolting Development"

Looking back in past messages you will find a comment I made on the course of long rates, 10-year plus US Treasury Bond Rates.  In particular the 10-year bond is the bond that makes all mortgages for single family homes.  The yield curve will correct as the FED lowers interest rates on all bonds from 1-year US Treasuries back to the 30-day Treasuries.  The FED rates will come down and therefore so will the yields.  The change will be the long term rates of US TReasury Bonds will go up! Here is the present outlook.  The outlook is based upon the Swap Market that is used to trade one set of short term bonds for another set.  A bit like rolling maturities.  All the Swaps do is indicate the market forecast of FED action in where rates will be after the next FED meeting. Date of FED Mtg.          Rate Forecast.           % Certainty December 18, 2024......4.42%........................86% January 19, 2025.......
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The Problems are the Path: FED Cuts Rates and Property Improvements

If one can get their faces off the Election and look at how interest rates will affect Real Estate, there maybe a chance Buyers can manage their decision to buy a home or invest in real estate. The frustrating event of a rate cut of 50 basis points, or one half of one percent has created, most buyers and investors with, a HUH?  Moment.  The mortgage rates dropped to 6.09% on the day of the interest rate cut by the FED.  On the investor side, interest rates for commercial properties dropped, but the down payments remained at 35%.  No big benefit there.  The Yield Curve corrected further with the 2-year Treasury Bonds dropping below the 10-Year Treasury Bonds.  A major improvement with the first time in years that the interest rate market was not forecasting a recession.  That is really good news! What happened after that was something I expected, the most market commentaries did not.  The Ten Year US Treasury Bond yield increased!.  This is no...
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