McKae Properties Real Estate Market Commentary

 It's been a long day coming.  We finally have a relief from bidding wars and over pricing of real estate.  The fact that the nation saw a 6% decline in average real estate price and the Bay Area saw a 4.5% decline gives testimony to the strength of Silicon Vally and the shortage of housing.   What does this all portend?  On Friday Mr. Powell speaks at an annual conference in the Rockies to give his credentials on being a "Hawk" on interest rates.  A big turn around from the past, and a delayed one of course.  With the rising of interest rates ahead of us the mortgage market will adjust to high mortgage rates.  High mortgage rates will convert to either higher down payments or a reduction I offering prices and sales prices.  Or, a search for homes within the buyer's approval range. Call it a redistribution of population.  A fact of life in human evolution. There has already been a sharp drop in the ratio Sales Price to List Price and an extension of Days on the Market

 With the employment numbers jumping to 528000 from an expected 250,000 an upset of the apple cart in forecasts and the direction of the economy has occured.   People are going back to work.  The people going back to work were those who were laid off or idled due to the pandemic.  It was the service industry and the travel industry.  It was all those who couldn't pay rent or their mortgage that the Government protected from eviction or foreclosure.  So why the upset? The low interest rates that created the situation we are in created a wealth of opportunities for risk takers and the growth industries.  Investment are measured against "Risk free rate of return".  That means 90-day T-Bills.  When T-bills went to 0% or less the sky was open and mana fell from heaven. Every idea under the sun came out of the minds of the aggressive  risk takers with little or no alternative to invest measurement of risk to.   The majority of investors in America are  institutions.  That means