McKae Properties Real Estate Market Commentary

" Breaking Up is Hard To Do", a 60's, or so, song from Neil Sadaka is a song for our era.  Just like our first love, things were going so smooth and then BANG.  What happened, everything was going so well?  Interest rates were declining, stocks were alway going up and every dip we bought more, home values kept moving up, we made unbelievable money with a thing called Crypto.  Then all of a sudden we had Covid, things came back and went higher, people shifted home searches away to areas were they could work remotely and have a better lifestyle at a lower cost of living. A buyer prospect backed away from a purchase  recently, he lost over a $million in Crypto....he is sick.  The happy smiling guy is gone.  FAANG Stocks are down so much people hate looking at their statement on line.  Yet....home prices keep going up.  Los Altos Hills is up 37% in the month of January and the entry home there is $4+ million. Yahoo Finance says..." How will the economy and markets handle

 Zillow spent last year aggressively expanding a home-flipping operation designed to make the $2 trillion U.S. Real Estate Market better for consumers, until a bad bet on home prices shut it down. To sell the thousands of homes a little known truth about the business, called "iBuying" popped up.  "Institutional Buyers" were the biggest names in global finance. Bloomberg News analysts came up with more than 100,000 property records show that Zillow and the other buyers, Opendoor and Offerpad were selling thousand of homes to the new landlords on the block: KKR, Cerebus, Blackstone and many other large hedge funds and institutions.  Those properties were never listed.  That caused the squeezing out of average buyers in the competitive housing market. Two out of 10 homes on average in the US went to iBuyers, double that in Sun Belt and Metropolitan areas and EVEN GREATER in communities of color! A diverse range of political voices from the Biden Administration to Conse

On this day December 31, 2021, the last day of 2021 it seems prudent to look back and determine the lessons we have learned from the experiences in 2021.  Lord Toynbee stated that History Repeats Itself.  So then, as the Lessons below should be a guide to what will repeat in 2022. I.   70% of buyers have been younger consumers.  This was reflected in their financial ability to escape from metropolitan or highly populated areas.  Covid 19 and the mutants had an impact on future lifestyles.  Superior homes with large spaces and multiple rooms that gave authenticity to their life styles and provided a positive environment for the "work-at-home" attitude. II.  Location and property types and sizes were no longer the only consideration.  An increased knowledge on the importance of achieving more well-being, deeper consciousness, and cultural relevance, that would ultimately empower buyers to make ethical decisions, were important motivations.      This was clearly reflected in the

 When Saul of Tarsus set out on his journey to Damascus the whole known world lay in bondage.  There was one state, and it was Rome.  There was one master for it all, and he was Tiberius Caesar. Everywhere there was civil order, for the arm of the Roman law was long.  Everywhere there was stability, in government and in society, for the centurions saw that it was so. But everywhere there was something else, too.  There was oppression for those who were not friends of Tiberius Caesar.  There was the tax gatherer to take the grain from the fields and the flax from the spindle to feed the legions or fill the hungry treasury from which divine Caesar gave largess to the people.  There was the impressor to find recruits for the circuses.  There were executioners to quiet those whom the Emperor proscribed.  What was a man for but to serve Caesar? There was persecution of men who dared think differently, who heard strange voices or read strange manuscripts.  There was enslavement of men whose

 Serendipity is the "Occurrence and Development of Events by Chance in a Happy or Beneficial Way." This is how the development of Facebook and its growth was established.  At least in the eyes of Facebook.  But there is many professions in which that occurred.  Traders, whether they be stock, bond or commodities; all had their instances of a serendipitous event while in a trading room, on the floor or in the local bar after trading hours.  It is this event that has been centered in large cities or a metropolis; in which the profession was centered. The result is, or was, that the cost of living all expanded to fit the large incomes that the profession provided. Take that and look at Silicon Valley.  Prices have escalated and the cost of living and home prices all went up accordingly.  While there has been a calling of a top and calling for a correction in home prices, it has all been for naught!  Once incomes continue to expand and the related benefits of working in such an a

 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