McKae Properties Real Estate Market Commentary

The stock market was up over 300 points before the FED made their announcement on no interest rate cut.  Then the follow up by Chairman Powell put the icing on the cake.  The key comment to my evaluation is: "the decision to cut rates would be a consequential one because it could ignite substantial market rallies that boost spending and investments".  There in lies the crux!  The stock market is too high and is feeding spending in their belief.  Real estate is too high and is curbing affordability and fueling speculation in flipping....my comment not FED.  since then the stock market has lost steam and has had negative results.  UP for the week but rally stopped since Powell spoke. The target levels of 5.1% for end of year 2024, 4.1% end of year 2025 and 3.1% for end of year 2026 are nothing more than target based upon hope....again my opinion!  If Trump wins all the targets are off the table!  Trump has stated he wants or is considering firing Powell.  That would mean a Stal

The potential of the passing of this act will have the following implications: 1.  The act could control properties presently exempt; such as, single family homes and new construction 2. More cities could expand rent control with the passage of this act. 3.  Removing Costa-Hawkins could lead to Vacancy Control in cities with rent control, limiting landlords ability to raise rents. 4.  The Act represents a broader shift of the California Legislature towards stricter housing regulations; thereby, creating uncertainty in real estate  investment analysis. 5.  Uncertainty could upset housing market balance with unfortunate circumstances. "The “Justice for Renters Act,” seeks to repeal Costa-Hawkins entirely, allowing for strict rent control on all types of housing, including single-family homes and newer apartments. It would also eliminate the ban on vacancy control, significantly impacting landlords’ ability to adjust rents when a tenant moves out and a new renter moves in. Compoundin

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