McKae Properties Real Estate Market Commentary

The ability to look back to give an indication of what the future could or will bring is essential when one looks to plan one's future. That could not be more the case in real estate than it is now. 2009 is the most recent period we can look at.  Remember the term "Black Swan", an unlikely event that occured?  At that time it was the mis pricing of real estate values due to the packaging of bonds created from mortgages.  The mis pricing that occured in that the risk was improperly recognized.  What followed was foreclosures, unemployment, lack of mortgage money and to a certain extend illiquidity in real estate.  It also created the best opportunity to buy real estate.  It took the stock market as we measure it in the S&P 500 to gain back a 58% drop in value about 4 years to hit the peak from the collapse.  During that period, great opportunities in real estate occured. What we have now is something that is close but far from the crisis level that was created in

Wasn't Yogi Berra a kick?  He took from Lord Toynbee his Nobel Prize on history repeating itself into Brooklyn speak.   I was reminded of that when I read about the closing of the slaughterhouses and the issue of hogs.  What does one do with all the hogs accumulating without their way into food chain?  They are not like cattle.  Cattle can be released to the pasture and graze until the food chain opens up again.  "Where did I experience this before?"   As a rookie stock broker in 1970, just out of college, I came to a stock market not much different than the past few  years.  New Highs after new highs and nothing could stop the stock market ascent.  The "new normal" was in vogue.  THEN, like something out of nowhere prices began to fall.  Fall they did, over 60%!  The Nifty Fifty were the FANG stocks then.  The difference it took over 3 or so years to fall 60%.  This past month it fell 60%.   Interest rates were rising back then and kept rising along with

It is so easy to let fear in without carefully examining the situation.  Yes, housing prices are coming down, yes housing prices came down in 2006-07, yes they came down in 1987.  Had you purchased at those times look what happened.  Home prices rebounded and went even higher. I had written in my inaugural letter that the stock market leads the real estate market.  Since records have been kept the price of homes have followed the stock market average.  Whether the average be the Dow Jones or the Standard and Poor 500 or any other index created.  Why?  The averages are economic measurements of our economy.  With every reaction down there was a rebound up and those rebounds kept going onward and went beyond the lows that created the concept of "crash".  10 years from now all those who went back to their rental or their under sized house will look back and regret not moving forward. How can one make a mistake?  Interest rates are at historic lows. There will be a new norma

Harley my Old English Sheep Dog looked up at me as I waited for cocktail hour to begin and said, "Now you know why a chew on furniture". We now are looking forward for the Governor to decide on the resumption of our economy.  Good Political play from POTUS.  If it is successful he wins and if it is a failure the Democratic Governors who opposed him making the decision are left holding "The Bag".   A stinky bag it will be.  Redwood City has declared that all walking outdoors must now wear a facemask.  Isn't this locking the barn door after the horse is stolen? Homes for sale declined 15.7% in March and so far this month the results are: Atherton: 6 new listings, 3 cancels, 2 cuts Menlo Park:  13 new listings, 6 pending, 7 sold, 1 withdrawn,1 expired, 3 cuts Palo Alto:  17 new listings, 9 pending, 9 sold, 3 expired, 4 cancelled, 3 cuts Woodside:  5 new listings, 1 pending, 5 sold, 1 withdrawn, 1 expired, 0 cuts Portola Valley: 2 active, 3 sold, 1 withdra

The new thing appears to be emails from all those we know and have known with their various jokes on being too long in Solitary.  "Going out this week? What should you wear to take out the garbage?" In Santa Clara County list prices of Single Family Homes have had a -2.88% fall in a 30-day trend, Luxury Home list prices have had a -10.78% fall in a 30-day trend.  Importantly, the average sales prices for single family is +8.10% and Luxury Single Family +0.28%. In San Mateo County Single Family list prices have a -5.66% 30-day trend and Luxury Single Family have had a -2.10% 30-day trend.  Average sales prices for Single Family homes are +11.27% with no statistics available for Luxury Homes in the 30-day trend. Watching the daily summary of listings of Atherton, Menlo Park, Palo Alto, La Honda, Redwood City, Woodside and Portola Valley the only trend I can see is that there have been a number of cancellations, expired and withdrawn properties in the Luxury Markets of Woo