McKae Properties Real Estate Market Commentary

My wife refuses to give up her Hair Dresser in Los Altos California.  So every month there is a 3 hour drive to Los Altos, listening to a Books on Tape Disc that make our drive pleasant. I then can drop her off see my doctors, or have lunch with a friend, or drop into a shop and spend about 3 hours relaxing.  This last trip was something of an eye opener.  I drove past a former client's recently property on El Camino Real in Menlo Park. It was a bad move for him to build a mixed use multi-family unit with 4 commercial spaces.  Built at the same time that car lots were torn down all along El Camino next to the Rail Line with the same concept of multi-family commercial spaces.  He had some great ideas at the time of his venture.  He planned on renting fully furnished units to the hoard of business visitors and out of state employees then coming to the Face Book, Google and related technology firms.  Thereby capitalizing on the need for small start up places.  TIMING WAS BAD!  A few a

The commentary and forecasting of interest rates have taken a Pivot from confidence that rates would be cut in 2024 to a point that there will not be a cut or the cuts forecasted will be late or slow in occurring. All attention has been on interest rate commentary and very little if any attention on total FED actions in slowing down the economy. Of the FED's tools the tightening beyond interest rates can occur in contracting Money Supply. Money Supply takes many forms if one looks at the Federal Reserve's Balance Sheet.  The most visible part the the Balance Sheet are the Assets.   To save the US economy and the world economy during the Pandemic the Federal Reserve began a policy of Qualitative Easing.  A policy of lowering interest rates and simultaneously buying Treasury Bonds, Mortgage Backed Securities and debt instruments to feed liquidity into the monetary system to help business and the population in general survive the economy that was shut down by the Pandemic.   On a

Realtor Settlement  First allow me to make a disclaimer.  The comments are my own.  They are not related or part of any comments of the National Association of Realtors, California Association of Realtors or any local Realtor Association I am or was a member of.  Nor are my comments that of eXp Realty of California and any Real Estate Broker I have been associated with either now or in the past. Now with that out of the way....6% real estate commission died years ago.  5% has been dying the similar death. (At least here in California) With the increase in property prices there has been a variable fee developed by listing agents with negotiation of services to the seller. Buyer/broker representation forms have been growing with acceptance. In my opinion to claim the 20% increase in property prices since the pandemic, on a national level, is associated with real estate commissions is ludicrous and a bit of a exaggeration.  It is really supply and demand and the cost of money that drove p

  From the beginning of the Pandemic to the present there has been numerous laws passed by Cities, Counties and the State of California to address the ills that landlords have placed on renters.   Most notably: Under Civil Code Section 1941.1 et seq . and the Health and Safety Code Section 17920.3 et seq. require landlords and property managers maintain rental units in a condition that is habitable.   Failure to do so is a breach of warranty of habitability.   I believe this law started the law suits and Town and Community awareness of issues that were being created by Landlords negligence. The influx of laws accelerated with the Pandemic.   Landlords were banned from evicting renters during the pandemic and renters did their best to find reason to not pay rent.   When the bans ceased evictions sky-rocketed.   In California renters had the benefit of Civil Code Section 1941.1 et seq. and the Health and Safety Code Section 17920.3 et seq. This State law along with the support of Renter

Investors, home buyers, and agents are convinced the FED will lower rates later this year. However, their record is not that great! Whether the investor is a Wall Street Titan, a Commercial Real Estate Investor or Speculator or an individual investor in stocks and bonds or real estate, they have been caught offside in both directions while making their decisions on the Path of Interest Rates over the past years. Let's take the commercial bets on office buildings.  No one expected a major shift in employees working from home as a result of the Pandemic. The shift created massive vacancies in office buildings across the United States and major world centers.  Office building owners felt it wise to take additional loans on properties before the pandemic, planning to refinance at lower rates in the future.  It did not work out well for them.  The FED raised rates to combat inflation and vacancies created a fall in income that put properties at risk.  Offices were not the only victims o

REMEMBER!  Lenders and owners are Diametrically Opposed!  This Adversarial Relationship stems from GREED, an entrepreneurial trait which brings both parties together. From the 1960's forward, Legislatures and Judiciary parts of our government have worked to protect lenders from the abuses that created an uneven playing field that favored lenders. (Residential) The most important legislation came from California in the "Anti-deficiency legislation of the 1930's. Rising inflation during the 1960's produced a severe real estate recession in 1965-67.  This occurred while the economy improved due to employment from the war effort of Viet Nam.  1963-64 Boom Led To The Savings and Loan Crisis.   Lenders viewed excess money on deposit as wheat to be harvested.  Money was lent quickly and deals where chased aggressively.  Brokers were in control, rates were below 7% and deals were taken on without regard to risk as inflation was low.  The result was excess Real Estate inventory