McKae Properties Real Estate Market Commentary

 The increase in home values has gotten much attention.  Prices have less to do with inflation and more to do with increase in value due to remodeling and updating older homes. As I look over the sales for the past year and work on Broker Price Opinions I find that the homes either for sale or sold have been fully updated to today's standards and buyer desires, marketability.  When an older home sells and then is remodeled and listed and sold the increase reflected in home prices have more to do with updating costs and buyer demand premium.  Increased home prices show that the new home is completely different in interior and exterior that the homes sale in the most recent past.  (Buyers are looking to buy what is current.)  The result of the sale price or list price is increased by the cost of remodeling with a demand contingent applied.  This is more a redevelopment phase in our real estate market.   Buyers today are among three groups.  The first group is the buyer who does not w

 At the end of a piece of literature there is an "Epilogue" that brings "Closure". Let's see if closure occurs in the "Fix & Flip" movement.  It appears to have been the case for Zillow. The error is human nature and the belief that a bunch of wires and semiconductors can replace the greatest computer that has been created...the brain and mind of an individual. The CEO of Zillow stated in one of the commentaries I read was that they got the formula wrong.  REALLY?   Algorithms are mankind's' answer to the future.   I thought the Zestimate was wrong from the start when I used it the get values of Estate Properties in Woodside and Portola Valley. They were all under priced.  Land, on which improvements are upon, is the largest part of real estate value.  The structure is only the desire and likes of the individuals occupying the structure.  We humans are unique and our likes and dislikes are as unique as we are.  Initially the Zestimate could

  Oops I do not want to say that losing a lot of money on a trade is  as good  as making a lot of money on a trade. It is not. For one thing, if you make a lot of money on a trade, then you have money, which can be used to buy goods and services. For another thing, if you make a lot of money on a trade, then you were at least in some rough sense  correct  about the trade, and being correct often about big questions is a valuable skill in finance and life.  If you lose a lot of money on a trade, neither of those things are true. And yet there is a certain prestige to it? Being correct is not the whole ballgame. Being  important  is important. “Important people like to deal with important people,” the  Goldman Sachs commandment  goes; “are you one?” The most famous JPMorgan Chase & Co. trader of the last decade, the one JPMorgan trader whom many people know by name or at least by nickname, is Bruno Iksil,  the London Whale , who is famous for losing $6.2 billion of the bank’s money.

Zillow the on-line Home-Listing Platform, said on Monday October 18th, it would pause its automated House-Flipping operations for the rest of the year!   Instead Zillow said it would close existing purchase contracts and selling the homes it has on hand.   Zillow further said, it was experiencing back logs related to to renovating the homes.   Constraints for on-the-ground workers created back logs. To further detail the announcement I have gone to the Wall Street Journal for Tuesday October 19, 2021;  Zillow stated the practice of buying refurbishing and selling homes using its database 3 years ago.  The WSJ article further opines that sales volume has recently begun to cool.  This was a profitable business for Zillow as they obtained fees on both the buy and sell side.  We call that DOUBLE ENDING.  While most realtors and agents have mixed opinions on the practice as it puts to question Agency, whose interest do you represent, the buyer or the seller?   Zillow Offers, the house flipp

 On September 30, 2021 the eviction moratorium ended.  The estimates I have is that there were 1.7 million homes in forbearance.  These are properties which have not made mortgage payments during the Pandemic.  1.7 million is down from over 7 million at the peak of the Pandemic.  There were 600,000 homes for sale in the U.S. at that time. The benefit today is that this is not 2007 during the financial crisis.  Home values have escalated at rates that have ben historic.  That would indicate that of the 1.7 million in forbearance a major portion should be able to refinance or re-negotiated to present-day mortgages.  Considering that interest rates are at historic lows; this gives the new mortgage payments a lower payment that previous loans in forbearance.  Those owners who are unable to afford have the benefit of a strong real estate market to sell their homes and pay off the debt and walk away with proceeds.  This was uncommon during the  Financial Crisis. As the Law of Supply and Dema

 When I read about the "bubble", the over pricing of real estate and "pandemic fears", I am reminded of an old Wall Street saying: "The Market Climbs a Wall of Worry". One thing for certain real estate is far different than the stock market.  No mater when or where, crisis or prosperity value can always be found in real estate.  It is just a matter of learning where to look.   The legislative end of the Eviction Moratorium will bring property on the market.  OPPORTUNITY! How many homes?  I can't tell you that.  I do know that there are certain statistics that are a telling indicator. There are approximately 1.7 million home is "Forbearance".  That means 1.7 million home owners have decided they will not pay their mortgage for one reason or another.  That number of 1.7 million is down from over 7 million during the peak of the Pandemic.  Of those 1.7 million who have not paid their mortgage from anywheres from 18 months or less, they are  or s

 Do you realize that not all the States have a FULL DISCLOSURE law in real estate transaction for residential properties?  That's right those documents, sellers are required to complete and provide to buyers and buyers are required to sign and initial, are not a standard in all states.  To those states who do not have the full disclosures the buyer is required to do their own research.  The seller is not required to inform the buyer if there is an issue with the property.   Take my first real estate transaction when I moved to Hawaii after graduation from college.  The house MLS listing stated "sewer", "yes".  Not all houses in Hawaii and in this case Kailua in Oahu had sewers, but septic systems.  Months after my purchase the toilet backed up.  I called the city and was told I was not connected to the sewers.  The prior owner did not pay for the hook up. How much...WOW, I just borrowed money from my widowed mother to buy this house to supplement my savings.   I