The Problem are the Path: 2023

It seems to me the problems we experienced in 2022 are enough for us to endure, let alone, for another year.  Statistically stock market declines of the 20% range , as the one we experienced in 2022, are not experienced the following year.  Real Estate is a different asset in which to use that statistical analysis on. 

We live in an area that is a Camelot.  Irrespective of what happens in the world around us, Silicon Valley remains resilient and firm.  The large advances in real estate we experienced from the beginning of the Pandemic, were not unexpected.

What we have to work with is the large amount of speculation that needs to be wrung out of our real estate market.   The concept of Risk Free Rate of Return is the major measurement that will or should be used to determine purchases or investing.  

2020 saw an enormous amount of money created in the money supply.  Some $9 trillion the Federal Reserve Governors created and disbursed into the US Economy that also found into the World Economy.  The result of which had the creation of large amounts of savings to support the Covid shut down.  Money has an unusual affect on people.  When one has more than normal there is a tendency to become frivolous in spending.  The result was assets of all sorts became demand items as saving rate of return plummeted to zero or near zero. 

When the shutdown was relaxed and we could once again could travel and go out to dinner and entertainment.  A shortage  of employees occurred and prices increased as the supply could not keep up with demand.  In addition to product and services, investments went to historically unsustainable multiples.  Investments were created that really, in my opinion, had no substance to them.  The result was when interest rates began to rise in large multiples the optimism and aggressive buying came to a halt.  

Risk Free Rate of Return went from Zero or near Zero to 3-4% or more.  the result was that many Stock investors saw the need to "Take Profits".  Then it became the term of Sell, but to Who, and prices came down to levels that the Risk Free Rate of Return did not match up to the potential profits.  Stocks have a tendency to be very volatile.  The Tech Stocks dropped 60-80% so fast it gave investors and owners of stock a severe case of acid indigestion!  That decline does have an impact on our area where many residents are employed by or are dependent on work from employees of High Tech Companies.  The lack of the feeling of wealth has a serious impact on the psyche. 

Real Estate is a different type of asset.  It does not have the volatility of stocks.  It was great fun to talk at neighborhood parties on how the value of one's house has appreciated, but it didn't really make much difference other than it was chit chat not investment talk!  Those who saw prices decline just took their homes off the market and are waiting to see what the future will bring.

Today the values of Silicon Valley Homes have seen some depreciation in value, 9% in past 9 months statistician's tell me.  Homes still sell.  Some with slight discounts and some with no discounts.  Look at the fidelity reports I have added below and you will see most cites have a slight to strong seller's advantage. 

What one does not see with the reports from Fidelity is the term "Concessions".  This is when a home sells, but the buyer asks for concessions to pay list or near list.  Concession usually have to do with repairs or replacements of items from the Disclosure Packet.  These items would be a deck that is rotted and needs replacement, a Termite/Mold report that has a repair list with cost associated with it, appliance(s), as examples.  Whatever the case, the concession and offer go as: offer to pay list subject to repairs completed at the close of escrow by the seller.  The net result is the agent sells the property at list per the records. The result is the owner gets proceeds less the cost or repairs or replacements.  The owner in this example is the responsible agent in the completion of the work, the permits and hiring of contractors.  The buyer gets the home they want at the terms they want without the pain of permits, contractors and inspections.

Atherton

Los Altos

Menlo Park

Palo Alto

Portola Valley

Redwood City

Woodside

Housing Inventory Snapshot				December 31, 2022
	Average List Price	30 Day Trend	Average Sold Price	30 Day Trend	Average DOM: active/sold	30 Day Trend	Number of Active Listings	30 Day Trend
Santa Clara County, CA
Single Family	$1,678,668	+0.97%	$1,586,979	-1.10%	90 / 28	26 / 3	302	-243
Luxury Single Family	$6,554,444	+7.23%	$4,055,346	+1.14%	131 / 40	37 / 18	94	-72
Condo/Townhome	$803,021	-3.64%	$816,322	-2.41%	81 / 32	18 / -4	145	-98
Luxury Condo/Townhome	$1,759,559	+0.38%	$1,642,662	+7.66%	89 / 30	28 / 8	48	-31
San Mateo County, CA
Single Family	$2,050,448	+1.51%	$1,840,367	-1.96%	87 / 32	27 / 10	164	-155
Luxury Single Family	$10,310,065	+8.98%	$6,851,000	-13.15%	165 / 69	49 / 40	52	-51
Condo/Townhome	$793,998	-3.61%	$872,463	+4.61%	131 / 48	37 / 6	78	-44
Luxury Condo/Townhome	$1,762,331	-0.13%	$1,719,167	-1.18%	80 / 20	11 / -37	21	-16
Santa Cruz County, CA
Single Family	$1,199,309	-3.98%	$1,168,563	-2.68%	98 / 34	19 / -1	119	-38
Luxury Single Family	$3,768,737	-0.38%	$3,119,211	+12.88%	121 / 36	17 / 22	38	-12
Condo/Townhome	$700,000	+0.58%	$751,237	-9.34%	131 / 34	8 / 19	17	-4
Monterey County, CA
Single Family	$999,545	+1.98%	$843,473	-5.92%	86 / 39	12 / -5	193	-52
Luxury Single Family	$7,413,998	+4.21%	$4,730,301	-46.50%	138 / 51	9 / -54	64	-11
Condo/Townhome	$657,576	-5.06%	$514,636	-17.08%	64 / 30	13 / -3	25	-3
Contra Costa County, CA
Single Family	$799,955	+2.61%	$775,895	-1.64%	72 / 44	14 / 10	422	-300
Luxury Single Family	$2,800,588	+5.28%	$2,111,663	+6.62%	96 / 39	26 / 15	139	-97
Condo/Townhome	$494,120	-6.72%	$487,030	-0.79%	66 / 46	13 / 14	113	-76
Luxury Condo/Townhome	$1,150,104	-9.21%	$1,105,796	-15.38%	68 / 25	25 / 3	35	-24
Alameda County, CA
Single Family	$884,104	-7.97%	$966,237	-6.43%	71 / 34	14 / 4	309	-279
Luxury Single Family	$2,879,763	+3.19%	$1,953,257	-6.98%	90 / 29	23 / 2	108	-87
Condo/Townhome	$623,451	-1.84%	$586,579	-6.10%	70 / 50	8 / 12	140	-122
Luxury Condo/Townhome	$1,232,383	+2.33%	$1,179,144	+8.91%	94 / 40	35 / 18	43	-40

As the forecasts appear to indicate a continue weakness in home prices, it has been a very selective market as the Fidelity Reports will show.  I expect real estate prices will be as selective by area too!.   

Fix and Flippers still are active, they are also under pressure as the homes they are flipping are starter homes subject to loan approval.  The forecasts are for the FED Fund Rate to go to 5% plus.  If so, mortgage will go beyond 7%.

What affect will that have on home prices?  I expect very little in the areas I have selected in the Fidelity Reports.  Cash is King and negotiation will be open, with sellers more interested in moving and willing to negotiate with buyers.

HAPPY NEW!

Harry Potter Christmas Eve: The best Christmas themed Harry Potter music...

Year End Greetings

 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 tribes came not from Rome, disdain for those who did not have the familiar visage.  And most of all, there was everywhere a contempt for human life.  What, to the strong, was one more man more or less in a crowded world? 

Then, of a sudden, there was a light in the world, and a man from Galilee saying,  Render unto Caesar the things which are Caesar's and unto God the things that are God's.

And the voice from Galilee, which would defy Caesar, offered a new Kingdom in which each man could walk upright and bow to none but his God.  Inasmuch as ye have done it onto one of the least of my brethren, ye have done it unto me.  And he sent this gospel to the Kingdom of Man into the uttermost ends of the earth.

So the light came into the world and the men who lived in darkness were afraid, and they tried to lower the curtain so that man would still believe salvation lay with the leaders.

But it came to pass for a while in divers places that the truth did set man free, although the men in darkness were offended and they tried to put out the light.  The voice said, Haste ye.  Walk while you have the light, less darkness come upon you, for he that walketh in darkness knoweth not whither he goeth.

Along the road to Damascus the light shone brightly.  But afterward Paul of Tarsus too, was sore afraid.  He feared that other Caesars, other prophets, might one day persuade men that man was nothing save a servant unto them, that men might yield up their birthright from God for pottage and walk no more in freedom.

Then might in come to pass that darkness would settle again over the lands and there would be burning of books and men would think only of what they should eat and what they should wear, and would give heed only to new Caesars and to false prophets.  Then might it come to pass that men would not look upward to see winter's star in the East, and once more, there would be no light at all in, the darkness.

And so Paul , the apostle of the Son of Man, spoke unto his brethren, the Galatians, the words he would have us remember afterward in each of the years of his Lord:

Stand fast therefore in the liberty wherewith Christ has made us free and be not entangled again with the yoke of bondage.

Page 1-16 Friday December 24, 2021 Wall Street Journal Opinion , Review & Outlook, editorial written in 1949 by the late Vermont Royster and has been published annually  since.

MERRY CHRISTMAS FROM THE MCKAE PROPERTIES TEAM

The Problems are The Path: Year End Opportunities

It has always been my contention that the end of the year is the best buying opportunities for assets; due to the fact, they are under pressure by year end selling.  Whether it was stocks and bonds, when I was in the Securities Industry, or now in the Real Estate Industry.  

Assets; such as, stocks and real estate are not like a pound of coffee with a set price per pound.  They are open to negotiation.  A set price, an offer price, will be given and  a bid below the set offer could be accepted.  Why, emotions, taxes, leverage or just tired of carrying a position.

Real Estate has gone through a Down Hill Slide this past year and a half.  I saw the potential some time ago when rates went ridiculously low with over $9 trillion added to money supply.  The speculation that occurred was in asset values; along with, the creation of new investments without any reason of fundamental value; other than, demand.  ECON 101 Supply Demand Curve is always in play.  Lack of supply and demand creates higher prices until supply is created. Now if the supply is from a computer formula the supply is unending and can be manipulated.  

This is not the case in fundamental assets.  There are only so many shares outstanding, bonds issued and real estate built, and vacant land is limited to the pure and simple fact that only a volcano can create land.

The Money Supply has shrunk since it hit over $9 Trillion to just below $9 Trillion.  During that time of shrinking slightly, the cost of money, say Mortgage Rates as an example, has gone from under 3% in March to over 7% in November.  Now consider that it has taken 22 years for mortgage rates to decline from over 8% to under 3%, this increase is traumatic!

I have reiterated Elon Musks comment that the FED is after Asset Inflation.  The other inflation we incur is in the supply of goods and services.  If the price of gas is high, then drill and create refiners to supply cheaper sources of fuel.  If the price of meat or grain is high plow more fields and raise more cattle, poultry and meat product sources. 

Now let's look at Real Estate, that is why you are reading this dispatch, blog or newsletter.  Demand for real estate has not diminished!  Yes, prices offered and prices of the end product sale have declined.  Those that have bought in the past year may not be able to sell at the price they bought at.  That has nothing to do with where you live, where you come home to at night and how you raise your family.  The house you own is not a pound of coffee or shares in Sales Force or Meta.

Here is the recent market survey in our area.

Housing Inventory Snapshot				November 30, 2022
	Average List Price	30 Day Trend	Average Sold Price	30 Day Trend	Average DOM: active/sold	30 Day Trend	Number of Active Listings	30 Day Trend
Santa Clara County, CA
Single Family	$1,662,607	-0.03%	$1,604,598	-0.52%	64 / 25	14 / 0	545	-96
Luxury Single Family	$6,112,576	+1.32%	$4,009,515	-5.26%	94 / 22	23 / -7	166	-35
Condo/Townhome	$833,336	+4.03%	$836,513	+4.17%	64 / 36	15 / 10	243	-70
Luxury Condo/Townhome	$1,752,901	+5.17%	$1,525,764	-1.57%	61 / 22	12 / -8	79	-23
San Mateo County, CA
Single Family	$2,020,002	+2.50%	$1,877,099	-1.74%	60 / 23	16 / 0	319	-76
Luxury Single Family	$9,460,324	+12.87%	$7,888,042	+13.79%	116 / 30	25 / -5	103	-28
Condo/Townhome	$823,741	-0.08%	$834,009	-6.90%	94 / 43	18 / 12	122	-18
Luxury Condo/Townhome	$1,764,565	+0.40%	$1,739,770	+7.84%	69 / 57	19 / 26	37	-9
Santa Cruz County, CA
Single Family	$1,248,956	-0.80%	$1,200,800	-3.48%	80 / 35	16 / 5	157	-35
Luxury Single Family	$3,783,000	-2.31%	$2,763,270	-15.85%	104 / 14	7 / -29	50	-9
Condo/Townhome	$695,946	-4.02%	$828,675	+11.44%	123 / 15	21 / -27	21	-9
Monterey County, CA
Single Family	$980,174	+5.14%	$896,542	-1.96%	74 / 43	13 / 15	245	-9
Luxury Single Family	$7,114,145	-1.42%	$8,841,111	N/A	128 / 105	9 / 43	75	-5
Condo/Townhome	$692,621	+3.76%	$620,665	+12.93%	51 / 34	12 / 6	28	-2
Contra Costa County, CA
Single Family	$779,621	-2.46%	$788,829	-0.64%	58 / 35	8 / 1	722	-158
Luxury Single Family	$2,660,086	+0.16%	$1,980,510	-2.37%	70 / 24	16 / -7	236	-53
Condo/Townhome	$529,713	+1.20%	$490,914	-6.58%	53 / 32	8 / 6	189	-34
Luxury Condo/Townhome	$1,266,745	+2.57%	$1,306,849	+16.47%	43 / 22	-2 / -2	59	-11
Alameda County, CA
Single Family	$960,625	-3.76%	$1,032,679	-1.68%	57 / 30	15 / -1	588	-253
Luxury Single Family	$2,790,735	+4.26%	$2,099,827	-4.64%	67 / 27	18 / 2	195	-69
Condo/Townhome	$635,130	+2.94%	$624,694	-0.66%	62 / 38	10 / 3	262	-68
Luxury Condo/Townhome	$1,204,352	+3.53%	$1,082,671	-4.88%	58 / 23	16 / -2	83	-29

Nothing looks horrific, does it?

Fidelity Title gives me a regular analysis of our markets.  Fidelity does have access to the county records and can provide a clear picture of our real estate market's health.

Atherton has a Slight Buyer's Market

Los Altos has a Strong Seller's Market

Menlo Park has a Strong Seller's Market

Palo Alto has a Slight Seller's Market

Portola Valley has a Slight Seller's Advantage

Redwood City is a Strong Sellers Market

Woodside has a Slight Buyer's Advantage

What is this telling you?  It tells me that the price declines are giving opportunity to buyers to buy when price declines occur.  It gives buyers an opportunity to buy without competing offers and the need to over bid.  The Seller's Real Advantage is their property sells.  

The Federal Reserve tells me that the almost $9 Trillion in Money Supply has not been taken away and buyers can afford to buy a home irrespective of interest rates.  It tells me that the layoffs in the Technology Industry are on a wide spread basis over the United States and not localized in the Bay Area.

Could interest rates go higher?  Probably, but I feel we have seen the severity of the increase.  The only adjustments will be minor.  Banks and mortgage companies will go back to the old form of lending.  They will create mortgages that buyers can afford in monthly payments.  The other side is those with cash can adjust their asset allocation from stocks, bonds and esoteric investments that express volatility and doubt of value for real estate which they can touch, feel and live in and off of.  IT IS YOUR REAL ESTATE!

HAPPY HOLIDAYS TO ALL AND TO ALL A GOOD NIGHT!

the Problems are the Path II

OPENING COMMENTS

The end of the year has always been a period of clean up of inventory.  This year is no different.  We are faced with the same issues past markets have been faced with.  Except, the present situation is in reverse.  The increasing rates have supplanted the falling rates.  which in turn has meant rising mortgage rates; rather than, falling rates that in some area of the world dipped to negative rates.  The problems face in the past were economic and health, lower interest rates and increasing money supply helped save the world economy.  Unfortunately, the excesses that occurred led to problems that are in todays economic environment.  Those problems were over speculative tendencies that lead to over priced assets.  Those assets created problems with housing and the lack of affordable housing.  Other assets such as new business have created Poster Children of our time.  You know them well, we may see others join the list as interest rates slowly creep up in the future.

Silicon valley is slowly seeing unemployment replacing full/excess employment and hiring binges.  Employers have moved out of the State and new business have been slow to develop.  People are laid off and recruiting staff terminated or diminished.

Supply and demand will always create prices.  We are now in an environment in housing that is bordering on buyer's market to seller's market.  Inventory remains light as present home owners find it difficult to give up low interest mortgages and low property taxes to the opposite; unless they are of the many who are seeking "greener pastures". 

The recent issue of November Luxury Home Marketing newsletter has the right content to quote here:

"

Challenging Times in a Market Full of Contradictions There is little doubt the luxury real estate market is facing some interesting challenges that even have experts contradicting each other in their predictions and assumptions. Statistics in many luxury markets still show that they are favorable to sellers – so why are homeowners remaining hesitant to list their homes? For the fourth straight month, the number of new listings entering the market has fallen, with increases in inventory levels mainly attributable to stale listings lingering on. Both sellers and buyers are sitting on the fence, with neither side wanting to jump into this unconventional market unless presented with the right opportunity. The average days on market have increased compared to last year, but relative to pre-pandemic averages, homes that have sold recently are still selling twice as fast. Outside influences, some of which are not typically identified as being impactful on affluent buyers and sellers, are also causing disruptions to their spending habits: such as concerns over a potential recession, interest rate increases, and a volatile stock market. Mortgage companies are offering creative alternatives, but even a slight dip in recent rates isn’t driving buyers to purchase despite statistics from the National Association of Realtors (NAR), the National Association of Home Builders (NAHB), and Realtor.com, showing demand still outweighs supply in many price points, property types, and locations. All indications are that those who need to buy and/or sell are continuing to do so, but for those whose criteria are more based on ‘wanting to buy,’ there is hesitancy as they hope inventory choice will improve and/or prices will become more favorable.

Will Prices Fall?

This is a big question, and yet the jury remains cautious as to what extent prices will fall and which locations, property types, and sizes will be most affected.

Since July 2022, there has been a slight, but continued decline in the median sold price for single family homes dropping from $1,311,000 in July to $1,275,000 in September; however, in October, the median price climbed back up to $1,313,525.

In contrast, in the attached luxury property market, the median sold price increased from $832,375 in July 2022 to $890,500 in September, only to drop to $878,500 in October.

These are not dramatic swings, but they show there is some volatility in the luxury market.

Interestingly, a recent article by Nasdaq1 speaks to an increase in the ultra-wealthy currently investing in luxury real estate.

“As the value of the dollar remains volatile, we’ve seen more new clients looking to park their money in a low-risk, luxury asset whose likelihood of appreciation is higher, forged by historically beautiful surrounding neighborhoods, sprawling acreage and square footage, and newly renovated constructions.”

According to their article and The Trend Report 20222 by Coldwell Banker Global Luxury, they foresee the value of luxury properties will continue to appreciate. Both site the historic gains in this segment of the real estate market and explain that prices will oscillate by month or quarter, but how the appreciation is clearly recognized by investors and homeowners as being a long-term decision.

“Prone to behaving cautiously, the affluent have begun to signal that they are looking for more stable long-term investments to protect their wealth and give them peace of mind.” 

Challenging Times in a Market Full of Contradictions There is little doubt the luxury real estate market is facing some interesting challenges that even have experts contradicting each other in their predictions and assumptions. Statistics in many luxury markets still show that they are favorable to sellers – so why are homeowners remaining hesitant to list their homes? For the fourth straight month, the number of new listings entering the market has fallen, with increases in inventory levels mainly attributable to stale listings lingering on. Both sellers and buyers are sitting on the fence, with neither side wanting to jump into this unconventional market unless presented with the right opportunity. The average days on market have increased compared to last year, but relative to pre-pandemic averages, homes that have sold recently are still selling twice as fast. Outside influences, some of which are not typically identified as being impactful on affluent buyers and sellers, are also causing disruptions to their spending habits: such as concerns over a potential recession, interest rate increases, and a volatile stock market. Mortgage companies are offering creative alternatives, but even a slight dip in recent rates isn’t driving buyers to purchase despite statistics from the National Association of Realtors (NAR), the National Association of Home Builders (NAHB), and Realtor.com, showing demand still outweighs supply in many price points, property types, and locations. All indications are that those who need to buy and/or sell are continuing to do so, but for those whose criteria are more based on ‘wanting to buy,’ there is hesitancy as they hope inventory choice will improve and/or prices will become more favorable.

Will Prices Fall?

This is a big question, and yet the jury remains cautious as to what extent prices will fall and which locations, property types, and sizes will be most affected.

Since July 2022, there has been a slight, but continued decline in the median sold price for single family homes dropping from $1,311,000 in July to $1,275,000 in September; however, in October, the median price climbed back up to $1,313,525.

In contrast, in the attached luxury property market, the median sold price increased from $832,375 in July 2022 to $890,500 in September, only to drop to $878,500 in October.

These are not dramatic swings, but they show there is some volatility in the luxury market.

Interestingly, a recent article by Nasdaq1 speaks to an increase in the ultra-wealthy currently investing in luxury real estate.

“As the value of the dollar remains volatile, we’ve seen more new clients looking to park their money in a low-risk, luxury asset whose likelihood of appreciation is higher, forged by historically beautiful surrounding neighborhoods, sprawling acreage and square footage, and newly renovated constructions.”

According to their article and The Trend Report 20222 by Coldwell Banker Global Luxury, they foresee the value of luxury properties will continue to appreciate. Both site the historic gains in this segment of the real estate market and explain that prices will oscillate by month or quarter, but how the appreciation is clearly recognized by investors and homeowners as being a long-term decision.

“Prone to behaving cautiously, the affluent have begun to signal that they are looking for more stable long-term investments to protect their wealth and give them peace of mind.”

Shift in Mindset

The Trend Report also sheds light on why affluent homeowners have shifted from their fearless and ‘FOMO’ buying of last year to taking a more considered approach.

“Between rising economic uncertainty, stock and crypto market volatility, climate change, and two years of living through an unprecedented health crisis, wealthy buyers have begun turning toward opportunities that give them long-term financial security and quality of life.

Real estate generally offers reliability and stability for those investors who are able to play the long game: hold onto their asset when the market trends down and wait until prices start to rise again.”

Equally, with interest rates more than double compared to 2020, 2021, and the first quarter of 2022, many homeowners recognize that selling their home to purchase another would be an expensive replacement unless they need to sell.

This has led to many sellers deciding not to put their homes on the market, which, when combined with buyers taking more time to make their decisions, has ultimately resulted in the slowing down of the market.

Demand vs. Supply

It is supply rather than demand that is creating the bigger conundrum in the market today. Buyers are still eager to buy, albeit at a slower pace, but there is simply a lack of new inventory entering the market.

Inventory levels may have increased compared to last year, but without new inventory, the return to pre-pandemic levels is unlikely, adding a further complication for buyers as current levels are unlikely to create the downward pressure on home prices they anticipate.

According to Nasdaq, there has never been more liquidity on the buyers’ side for quality homes, but until sellers’ price expectations start to align with buyers’ perception of value, we will continue to see this contradiction in the market.

Not All Markets Are Equal

After two years of affluent buyers heading away from urban centers, there has been a significant return to traditional centers of luxury in 2022, and old favorites across North America, such as New York, Boston, Chicago, Toronto, and Vancouver, are seeing the benefits of this demand.

While prices decreased during the pandemic for the smaller city footprints, they subsequently became comparatively more affordable against the escalating values seen in rural destinations, emerging markets, and resort markets.

Much like the ownership of luxury real estate, these metropolises have once again been recognized by the affluent as locations that will hold their value over the long term – seen equally by domestic and returning foreign investors as safe investment havens.

In contrast, markets that benefited from the demand frenzy of 2020 and 2021 and the subsequent influx of buyers may see the greatest cooling off during the last part of 2022. Indeed, compared to 2021, the velocity of sales has already dropped significantly in many, and expectations are that demand and prices will settle into a more mature rhythm in 2023.

Luxury Market Still Offers Opportunity

While there is much debate about how things will play out over the next six months, like all markets, there is always an opportunity for those who are ready. There are niches in every market: whether moving to a location that affords a better cost of living, recognizing luxury pockets or property types that are next in the demand cycle, or simply biding one’s time in anticipation of finding a property that is below market value.

But more importantly, according to a survey conducted by Coldwell Banker Global Luxury for their Trend Report, it seems that luxury real estate remains an important asset for the affluent.

“Regardless of an affluent buyer’s financial profile, there is still significant confidence in the luxury real estate market. According to our survey, nearly 90% of respondents believe in the stability of owning property. Even if some buyers have dropped out of the real estate game due to fatigue, frustration, or even hesitation this year, they may be primed to return as inventory levels improve.”"

MY COMMENTS CONTINUED

The FED will move forward with rising rates.  Home prices and assets will be affected.  Affordability is the focus of the FED, in my opinion.  The inflation rate we have experienced is most commonly affected in housing costs.  That is in Rents and Home Prices. 

I feel that the next market that will see price pressure in the Rental Market.  The Foreclosure Moratorium has put some almost 2 years of inventory on the market.  Looking at the condition of the properties to the price landlords are asking is a condition of lack of rationality.  As one landlord tells me, the only renters he has applying are transients from other countries that bring numerous families together to afford rentals.  They pay cash, but leave the property a mess!

The most recent issue of the Wall Street Journal front page dealt with investors backing out of the purchasing of single family homes for the rental market.  Down 30% from last year they are faced with a fall off in demand and political reasons over price hikes that will limited rental increase.

Watch prices through the end of the year, the low inventories at the beginning of the year and the inventory increases in Mid February to tell us more of the direction to answer the QUESTION..."HOW'S THE MARKET?"

Happy Thanksgiving, now run off the excesses!