McKae Properties Real Estate Market Commentary

  The National Association of Realtors nationwide settlement that takes effect August 16, 2024 will create a new standard in Residential Real Estate. Prior to the settlement buyers and agents would link up, be shown property and made offers with the knowledge that the seller had posted on the Multiple Listing Service the seller's intention to pay the buyer's agent his commission and how much! The new rules change dramatically.  The change may put many buyers on a defensive path of "what if".  The path is that the buyer will be required to sign a Buyer/Broker Fee Agreement that states the commission their agent/broker will have negotiated with the buyer to be paid if their agent/broker represents the buyer in a purchase. The agreement has a clause that states the agreed commission of the agreement will be offset by any fees received from the seller to the buyer's broker. This may cause buyers to worry, what if the seller will not pay the agreed fee the buyer signed

You all know the story about Goldilocks and the Three Bears...Don't You??  Let me summarize it here.  Three Bears: Papa Bear, Mama Bear and Baby Bear lived in the Woods.  Mama Bear made porridge.  Poured in Papa Bear's Big Bowl, Baby Bear's mid sized bowl and Mama Bear's small.  It was Too Hot.  They went for a walk and here comes Goldilocks skipping through the forest.  She sees the open door to the the Bear's house and walks in.  She was hungry and the porridge smelled so good.  Papa Bear's was too Hot, Mama Bear's was too cold....BUT Baby Bears was just right.   So we are in the Goldilocks' economy.  The last US Government report had July with a 2.8% GDP growth rate and a 2.5% inflation rate.  The stock market was hitting new highs and property prices kept moving higher with little inventory.  Mortgage rates were above 7% with affordability still big question.  The FED's measurement of inflation still had two areas that need to come in.  The Stock

Where do I start?  The layoffs continue in Silicon Valley.  According to Layoffs.fyi, 107,370 workers have been laid off to date in 2024 by 366 tech companies.  Foreclosures are popping up in Paradise as Zillow notes foreclosure on Oahu, the most expensive state in the US per cost of living index.  Locally Notice of Defaults are increasing in the Commercial Sector for the smaller projects where investment groups took too much leverage and now are faced with an expiring mortgage with vacancies, permit violations, red tags and inability to refinance without contributing extra equity for a new loan with rates doubling the previously expiring loan. Commercial buyers are looking for 7-9% Cap Rates.  Sellers are wanting 5% or even sometimes lower.  Triple Net buildings for Pharmacies, banks, discount shops . That does not include the large Commercial Projects that line El Camino Real in Silicon Valley or the offices of San Francisco and San Jose who are a major subject matter for newspapers

Recession: " ...a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarter", from a 17th century definition it is, "...a temporary suspension of work or activity".  The Present Day standard needs measuring devices or formulas, the 17th century is simply put and to know that there has been a decline in business is easy to experience without a Economist declaration. I have found that the best place to see the beginning of a recession is the reduction of spending by the "Nouveau riche".  There is no better place to determine a recession other than to look at Bordeaux Future Sales.  The premise on Future Sales is from the en primers  of the Bordeaux region who sell futures in spring after a harvest.  They get cash up front to finance the next crop and the consumers get a discount on wines that will be bottled two years later.  China was booming the World was bo

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