McKae Properties Real Estate Market Commentary

On a historical basis as the year end approaches there is a tendency to clean the books.  Inventory is marked down, offers are taken and unsold inventory is taken off the market to install once again the following year. The issues at present are inflation and the inability of the FED to get immediate satisfaction.  Or, at least, immediate satisfaction as the Media seems to want.  The FED on a historic basis takes time to wait to see how the populace reacts, how business reacts, how the investment community reacts.  Now add to the FED's actions the political action of deficit spending.  Spending to support allies at war, spending to support immigration issues both pro and con, spending to fund already in existence budget items.  Finally, we need to look at savings from the Pandemic years. In the past cycle of rising interest rates, we need to go back to the 70's.  Interest rose for the same reasons they are rising today...inflation.  Unfortunately; the increase in rates did not

 The last letter I detailed the yield curve, as seen below. TREASURYS TICKER   COMPANY   YIELD   CHANGE   US1M U.S. 1 Month Treasury 5.424 -0.004 US3M U.S. 3 Month Treasury 5.509 0.013 US6M U.S. 6 Month Treasury 5.564 0.006 US1Y U.S. 1 Year Treasury 5.39 0.029 US2Y U.S. 2 Year Treasury 5.016 0.032 US10Y U.S. 10 Year Treasury 4.616 -0.039 US30Y U.S. 30 Year Treasury 4.756 -0.072 Prior to the Hamas attack on Israel, the 10 and 30- year  bonds were on the verge of breaking 5%.  Monumental; in that, the break would mean bonds will be competition to any investment decision.  The Institutional Investor; which dominates our investment markets, can now look a long term treasury bonds to finance the actualarial  returns they are to provide to their clients.  The rise in interest rates is a major threat to growth stocks; such as technology, as the high return is more competitive to volatility and the lack of a current return in dividends.  Technology has had a great run in equity values and fed

COMMENTS ON INTEREST RATES, YIELD CURVE AND INFLATION AND THE AFFECT ON HOME PRICES, REAL ESTATE INVESTMENTS AND INVESTMENTS IN GENERAL A Yield Curve is created by the daily rates of trading in the U.S Government Bond market from 30-day Treasury Bill to 30-year Treasury Bond.  The rates below are an example from www.cnbc.com TREASURYS TICKER COMPANY   YIELD CHANGE %CHANGE US1M U.S. 1 Month Treasury 5.394 -0.006 0 US3M U.S. 3 Month Treasury 5.498 0 0 US6M U.S. 6 Month Treasury 5.564 0.006 0 US1Y U.S. 1 Year Treasury 5.473 -0.003 0 US2Y U.S. 2 Year Treasury 5.087 0.01 0 US10Y U.S. 10 Year Treasury 4.542 -0.016 0 US30Y U.S. 30 Year Treasury 4.669 -0.027 0 The data is from earlier dated CNBC.com Bond section.  It is a on going measurement of where each U. S. bond maturity was trading on a Daily basis.  This Yield Curve is "inverted". This means that the yields are higher near term than they are long term. The general belief among Economists and Traders is than when an Inverted Yi