McKae Properties Real Estate Market Commentary

There is something missing from the "Media" that must be addressed in forecasting Home Prices.  What you and I have either read or seen has dealt with Recession, Bear Market in Stocks and forecasts on the housing market.  All forecasts are based upon history.  History going back before anything a dramatic as what we have experienced in past 2 years. Certainly as Lord Toynbee wrote "History Repeats Itself" there is truth.  History is not alway repetitive in circumstance that eventually lead to a conclusion.  Let us take the Federal Reserve System and the Board of Govenors action to lower interest rates and take on a strategy of using Quantitative Easing.  A never in history event would not result in "History Repeating Itself". In fact it is more of creating a new history.  The back page of the Friday, June24, 2922, Edition of the Wall Street Journal Business & Finance Section points out Americans usually lack something heading "A LOT OF CASH".

 The stock market is definitely in a Bear Market, as defined by a 20% correction from past highs.  Lower lows and lower highs all create for a trend downward.  Interest rates had a big day in the terms of Mortgage Rates this past week.  At one point I saw a 6.4% 30 year mortgage offered.  30-year conventional per the local Mercury News were quoted at 5.9%; which is unique to the 30-year jumbo at 5.44%.  Whatever the rate, they are up substantially from the past week and the month prior and going back to one year ago.  The days of The FED is Your Friend are done.  Easy money and frivolous spending is out.   There are 75 new listings in the past 7 days, up from 63 a week ago.  23 price cuts and fewer sales and closes as the days and weeks prod by.  Agents are sending out emails offering higher commissions to agents representing buyers....as if we are pimps who work for the highest bidder.  Agents who prided themselves on numerous listings now are offering wine and cheese parties to promo

 Real Estate is an Asset Class that represents store of value.  Unlike stocks, bonds, coins, commodities and crypto, real estate offers offers livability.   I have always had issue with the concept of interest rates being used to control the economy and inflation.  It is really nothing more than an adjustment of supply to match demand.  Common sense and affordability will control the rest.  The increase in rates with more to follow will affect real estate prices just as it has stock and bond prices. One in 5 listings in the US has had a price cut.  We have not seen that so far in our area. As I watch the Daily MLS Listings summary for our area, I do see agents offering buyer agents more in commission to motivate their buyers, I do see more yard sales, I do see more open houses.  Sooner or later the trend in the US will follow through to our area. Californication or the movement of Californians flush with cash to parts east to buy has finally slowed down, says Redfin.  Further Redfin st