McKae Properties Real Estate Market Commentary

Interest rates are going up and will go up further in the future.  The stock market most of Silicon Valley buys in taking a BEATING.  There are no vestal virgins in the temple the Visigoth's have taken them home. So where do you put your investment savings.  One area that has always held up is rental or income producing real estate.  From single family homes, multi-family and apartment buildings.  They offer cash flow and tax shelter with appreciation from the growth in income to the amortization of mortgages. I have a great You Tube visual for you to watch. If you've ever thought about buying an investment property, here's a  solid video from the "Meet Kevin" youtube channel .  Kevin definitely gives some solid "insider" tips in this video.  If you'd like to continue the conversation and start the process of finding a great local deal, feel free to reply to this email or text me @ 650-743-7249 anytime.  Gary McKae, gary.mckae@exprealty.com

  Mortgage rates jumped again this week, giving no relief to the price-weary homebuyers still in the market. The rate on the 30-year fixed mortgage increased to 5.66% from 5.55% the week prior, according to   Freddie Mac , and is up more than a half-point from two weeks ago. While lower than the 5.81% registered in June, the rate remains over 2 percentage points higher than the start of the year. Higher borrowing costs have left cash-strapped homebuyers at a divide. Some folks have opted to put off their purchase plans and wait for better market conditions, while those who remain are taking advantage of the dip in competition to strike a bargain with sellers. “The increase in mortgage rates is coming at a particularly vulnerable time for the housing market as sellers are recalibrating their pricing due to lower demand, likely resulting in continued price growth deceleration,” Sam Khater, Freddie Mac’s chief economist said in a news release Ronda Lee Wed, August 31, 2022, 7:31 AM · 3 mi

 It's been a long day coming.  We finally have a relief from bidding wars and over pricing of real estate.  The fact that the nation saw a 6% decline in average real estate price and the Bay Area saw a 4.5% decline gives testimony to the strength of Silicon Vally and the shortage of housing.   What does this all portend?  On Friday Mr. Powell speaks at an annual conference in the Rockies to give his credentials on being a "Hawk" on interest rates.  A big turn around from the past, and a delayed one of course.  With the rising of interest rates ahead of us the mortgage market will adjust to high mortgage rates.  High mortgage rates will convert to either higher down payments or a reduction I offering prices and sales prices.  Or, a search for homes within the buyer's approval range. Call it a redistribution of population.  A fact of life in human evolution. There has already been a sharp drop in the ratio Sales Price to List Price and an extension of Days on the Market

 With the employment numbers jumping to 528000 from an expected 250,000 an upset of the apple cart in forecasts and the direction of the economy has occured.   People are going back to work.  The people going back to work were those who were laid off or idled due to the pandemic.  It was the service industry and the travel industry.  It was all those who couldn't pay rent or their mortgage that the Government protected from eviction or foreclosure.  So why the upset? The low interest rates that created the situation we are in created a wealth of opportunities for risk takers and the growth industries.  Investment are measured against "Risk free rate of return".  That means 90-day T-Bills.  When T-bills went to 0% or less the sky was open and mana fell from heaven. Every idea under the sun came out of the minds of the aggressive  risk takers with little or no alternative to invest measurement of risk to.   The majority of investors in America are  institutions.  That means