McKae Properties Real Estate Market Commentary

 Higher interest rates, Low unemployment, Help Wanted signs, Empty store fronts, are all indicating to the passer by that the economy is confusing.  "   Residential sales are down substantially on a year-over-year basis, inventory is on the rise, and price reductions are becoming more common." The reader should keep in mind that our real estate market moves differently than the rest of the United States and the rest of the State of California.  The "media" which reports real estate is 4-6 weeks behind in their reports.  Sort of like listening to a delayed broadcast of a baseball game while watching it live.   Sales are definitely down from June of last year some 30%.  Last year was also the hottest housing market we have had in the past 12 years.  So it is bound to have some pause.  Still it appears there was about 5% over biding during the slow down.  So things are not that bad. What is really bothersome is the "Feeling" of this market environment.  Like

McKae Properties Silicon Valley Real Estate Market Commentary: The Prices Come Tumbling Down : Some years ago I came face to face with a competitor over a Menlo Park Listing.  The owners were from Oregon.  They had owned the property f...

Some years ago I came face to face with a competitor over a Menlo Park Listing.  The owners were from Oregon.  They had owned the property for some time.  They were faced with updating and correcting many problems that would put them in violation of the Landlord/Renters Act if not repaired.  When they faced the costs of updating the house and property and rent the recapture rate was too far out based upon their age.  They opted to sell. The agent I had known from his association with another Brokerage Firm of national recognition.  He was now an independent.  Going independent was not something new.  The real estate brokerage firms at that time had a scale of payouts based upon production.  The more the agent produced the higher the payout.  The exception to the rule were the agents who consistently were larger producers.  They got the highest payout both realtor and brokerage could agree upon. The realtor made a proposal that put me back.  "I will buy the property, all cash, clos

There is something missing from the "Media" that must be addressed in forecasting Home Prices.  What you and I have either read or seen has dealt with Recession, Bear Market in Stocks and forecasts on the housing market.  All forecasts are based upon history.  History going back before anything a dramatic as what we have experienced in past 2 years. Certainly as Lord Toynbee wrote "History Repeats Itself" there is truth.  History is not alway repetitive in circumstance that eventually lead to a conclusion.  Let us take the Federal Reserve System and the Board of Govenors action to lower interest rates and take on a strategy of using Quantitative Easing.  A never in history event would not result in "History Repeating Itself". In fact it is more of creating a new history.  The back page of the Friday, June24, 2922, Edition of the Wall Street Journal Business & Finance Section points out Americans usually lack something heading "A LOT OF CASH".

 The stock market is definitely in a Bear Market, as defined by a 20% correction from past highs.  Lower lows and lower highs all create for a trend downward.  Interest rates had a big day in the terms of Mortgage Rates this past week.  At one point I saw a 6.4% 30 year mortgage offered.  30-year conventional per the local Mercury News were quoted at 5.9%; which is unique to the 30-year jumbo at 5.44%.  Whatever the rate, they are up substantially from the past week and the month prior and going back to one year ago.  The days of The FED is Your Friend are done.  Easy money and frivolous spending is out.   There are 75 new listings in the past 7 days, up from 63 a week ago.  23 price cuts and fewer sales and closes as the days and weeks prod by.  Agents are sending out emails offering higher commissions to agents representing buyers....as if we are pimps who work for the highest bidder.  Agents who prided themselves on numerous listings now are offering wine and cheese parties to promo

 Real Estate is an Asset Class that represents store of value.  Unlike stocks, bonds, coins, commodities and crypto, real estate offers offers livability.   I have always had issue with the concept of interest rates being used to control the economy and inflation.  It is really nothing more than an adjustment of supply to match demand.  Common sense and affordability will control the rest.  The increase in rates with more to follow will affect real estate prices just as it has stock and bond prices. One in 5 listings in the US has had a price cut.  We have not seen that so far in our area. As I watch the Daily MLS Listings summary for our area, I do see agents offering buyer agents more in commission to motivate their buyers, I do see more yard sales, I do see more open houses.  Sooner or later the trend in the US will follow through to our area. Californication or the movement of Californians flush with cash to parts east to buy has finally slowed down, says Redfin.  Further Redfin st

  The rise in interest rates are beginning to show the economy is slowing down.  Stocks are the most liquid of assets. Stocks and bonds are more immediate in price changes. Real Estate is slower in reaction.  Real Estate must be watched to gather trends. I personally look at the MLS Daily Summary.  It lists all the new listings, pending sales, sales, with drawn, cancelled, expired, sold, and most important back on the market. The MLS Listing  indicates a sellers market as home prices stay relatively firm. Sales occur at over list in most of our markets.  Price cuts are beginning  to mount.  We are still in the active season in the Real Estate market.  Once we get into June and the sales of April and May close escrow, we will see if a slow down in price or listings occur.  It is my observation that the listings are very strong now, I doubt they will slow down.  Why, too much money has been placed in remodeling and updating by contractor, speculators and home owners to want or can pull h