The Problems are the Path: FED calls interests rates Wednesday January 31

On Wednesday the FED will tell what the tendency is for lowering interest rates.  If you readers just rely on CNBC, Bloomberg or some Social Media Site, I suggest you get on the St. Louis Federal Reserve Bank's mailing list.   Add to the Wall Street Journal and the U.S.  Census Department.  With those three sources you will not find yourself being jerked around by Media promotions and investment banks and advisors promoting their positions.  

The Wall Street Journal had a list of the four new members of the Federal Reserve Voting Panel.  All four say too soon to cut rates.  The Federal Reserve so indicted the same.  The U.S.  Census reports showed slight declines in inflation with nothing near 2% annual rates.  The Census also stated POSITIVE growth in the US Economy.  All quite good for high interest rates.  It would appear to me why cut rates if the economy is doing so well?  The next issue the FED Governors must be looking at are housing prices and rents.  The Gen Z cannot afford homes per a local news media.  California average homes are of $850,000.  I take difference to that comment as I see my mentees selling homes in new developments to Gen Z'ers in new developments at a level of $650,000.  With new developments creating competition it will sooner or later put pressure on Existing home sales.  

Adding to the pressure of new home developments the supposedly Gray Tsunami of the Baby Boomers selling wave is sure to begin gaining momentum.  Especially so, as the Home Mortgage rate drop.   

There is one more item you would have learned from the Wall Street Journal before you found it on your You Tube site of Novices who promote themselves as "Influencers" seeking your subscription payment.  The FED has a special program which will come to an end on March 11, 2024.  The special program is providing a 5.5% rate to all banks and acceptable institutions' deposits with the FED.  What has that program done? It has removed funds from Money Supply.  As the deposits are locked up, banks no longer need to take risks with mortgages, consumer loans and business loans.  Remember there are several trillion dollars in loans to large commercial projects that are coming due. 

Commercial projects are not foreclosed upon.  They either sell to another investor or the banks renegotiates the loan.  If you believe the "World is Coming to an End" You Tube Influencer...DON"T.  With the funds flowing back to the Banking System there will be funds to negotiate commercial loans.  

Keep in mind China is in a recession and the property sector is collapsing developer by developer and taking state and local banks with them.  The Bank of China cannot let that happen. If China won't let it happen do you think the FED will?

Zillow just issued their forecasts for real estate in the US HERE.  It is quite interesting.  Those areas which were once under pressure and saw double digit drops are forecasting 3-5% home price increases.  Places like San Francisco are still in the negative forecasts and is most of Silicon valley.  The Sacramento Valley area are forecasting increase in home prices, scant by increases.

Going back to the Census Reports, the New Home Sales

01/25/2024 10:00 AM EST

Sales of new single-family houses in December 2023 were at a seasonally adjusted annual rate of 664,000. This is 8.0 percent (+/- 24.2%)* above the revised November 2023 estimate of 615,000.

December 2023: +8.0* % Change
November 2023 (r): -9.0* % Change.

Not bad reading for those looking for a first time home with existing home sales frozen at new low inventories.

From the same Census report of January 25, 2024 high interest rates are not have a detrimental affect on the economy per this report: Advance Monthly Manufacturers' Shipments, Inventories, and Orders

01/25/2024 08:30 AM EST

New orders for manufactured durable goods in December, up three of the last four months, increased $0.1 billion or virtually unchanged to $295.6 billion.

December 2023: 0.0° % Change
November 2023 (r): +5.5° % Change

From the same rporting wholesdale inventories are showing confidence in the future in spite of high rates: Advance Wholesale Inventories

01/25/2024 08:30 AM EST

December end-of-month inventories were $897.7 billion, up 0.4 percent (+/- 0.4 percent)* from last month.

December 2023: +0.4* % Change in Inventories
November 2023 (r): -0.4* % Change in Inventories

The Consurer has confidence in spite of hiigh interest rates: Advance Retail Inventories

01/25/2024 08:30 AM EST

December 2023 end-of-month inventories were $803.3 billion, up 0.8 percent (+/- 0.2%) from last month.

December 2023: +0.8 % Change in Inventories
November 2023 (r): +0.1* % Change in Inventories

Retail Inventories are up: Advance Retail Inventories

01/25/2024 08:30 AM EST

December 2023 end-of-month inventories were $803.3 billion, up 0.8 percent (+/- 0.2%) from last month.

December 2023: +0.8 % Change in Inventories
November 2023 (r): +0.1* % Change in Inventories

Durable Goods remain strong: Advance Monthly Manufacturers' Shipments, Inventories, and Orders

01/25/2024 08:30 AM EST

New orders for manufactured durable goods in December, up three of the last four months, increased $0.1 billion or virtually unchanged to $295.6 billion.

December 2023: 0.0° % Change
November 2023 (r): +5.5° % Change

Advance Wholesale Inventories

01/25/2024 08:30 AM EST

December end-of-month inventories were $897.7 billion, up 0.4 percent (+/- 0.4 percent)* from last month.

December 2023: +0.4* % Change in Inventories
November 2023 (r): -0.4* % Change in Inventories

We are buying less overseas: Advance U.S. International Trade in Goods

01/25/2024 08:30 AM EST

The advance international trade deficit in goods decreased to $88.5 billion in December from $89.3 billion in November as exports increased more than imports.

December 2023: 88.5° Billions of Dollars
November 2023: 89.3° Billions of Dollars

To summarize my position from the help of the US Census, Federal Reserve of Sta. Louis and the Wall Street Journal no cut in interest rates ahead.

This will give investors opportunities in the commercial small apartment sales area.  Last month properties were being listed with 5.5% Cap Rates, today they are 6.72% Cap rates and up to 8%.  My impression is the debt the small commercial projects have to contend with is a loan that will not and cannot be renegotiated.

I am in touch with numerous apartment rental projects that sellers are willing to negotiate.  Some will finance the sale!

As before, call or write for any question you may have and think of me of your "in the know real estate professional".

The Problems are the Path: Much Ado About Nothing Part II

 The best description for the end of 2023 was a "Melt Up" in Wall Street terms.  Analysts were fighting amongst themselves as to who can predict the number of FED Interest Rates reductions.  Let's face it analysts are just selling themselves and the their predictions are soon lost, unless they are right.  It is always easy to point elsewhere when the prediction doesn't go according to their estimates.  Or, just simply forget and never say much about it until there are proven wrong December 31, 2024.  By then, who will remember or even care?

The Governors of the Federal Reserve System are now coming out and stating that they are not committed to rate cuts.  (Fed's Bowman and Bostic caution against rate cuts too soon). Especially when the rate cuts are from 1-7.  The historic possibility of 7 rate cuts do not forecast well for our economic situation.  Why would the FED flood the market with money.  There is over $7 trillion in the FED's Balance Sheet to create more forecasts of Economic Doom and Gloom.

I look at the slow down in the economy and the decline in inflation a combination of situations.  Interest Rates? Yes! The other factor to consider is China.  China is the Second Largest Economy in the World.  (The US is #1.)  When China falls into a recession, as it is presently in, the world feels it.  Unemployment in China in the younger generation is in the double digits.  President Xi wants them to go back on the farm.  Just like he did when he was in college.  Xi wants to bring back Mao, Xi sees real estate as a home you live in.  It is not a speculation, a rental, a business.  Xi is Mao's child.  The question will be how long can he hold on until the Bank of China cannot support all the local bank and non-banks loan portfolios of real estate loans.

I can see where there will be a potential crisis.  China and the Little Tigers of Asia work together.  The failure of business to flow to the Little Tigers from China will have serious consequences.  These Little Tigers have Debt.  Their debt is US$ based debt.  High interest rates will create crisis with the Little Tigers.  If the Tigers begin to default then the lender of last resort, the US Treasury and the Federal Reserve System comes to the rescue?   The Bank of China will be sell their vast inventory of US Treasury Bonds to support the home front bank, the largesse to the Silk Road, Africa and South America.  

READ Federal Reserve of St. Louis " Are Developing Countries Facing a Debt Crisis"

Doubt the FED does anything.  Better to see China fall upon its sword than help the Sabre Rattling China of President Xi.

Real Estate in the US is not as bad as the publications are making it out to be. Lennar Homes reported their earning recently.  Lennar surprised Wall Street with higher earnings, raised their dividend from $1.50/share to $2/share and increase their share buyback by $5 billion.  Lennar sells homes from $500,000 to $1,200,000, 1800 sf to 3500 sf.  Lennar provides financing, give discounts and credits for upgrades.

Now with all the no homes for sale nonsense that is going on, America and California are buying enough new home construction to create new lifestyles for the work from home to the newly marrieds looking to start a new life together and substantial profits for American Home Builders!

Lennar is not the only developer profiting from the movement to affordable housing: D.R. Horton, Pulte Home Group, NVR, Toll Brothers and Taylor Morrison Home Group just to mention the actively traded companies.   All of which are having great years, increasing profits, dividends and stock repurchase programs.

Where are high interest rates hobbling home buyers?

It certainly is hobbling home sellers when you look at reports like this one: San Francisco Landmark Nob Hill Condo Drops Over 30 Percent.  Listed for $1.798 million in January of 2016, the “tastefully remodeled and…ready to occupy” two-bedroom unit #1414 in the Gramercy Towers at 1177 California Street, “a Nob Hill landmark located in one of San Francisco’s most exclusive neighborhoods,” sold for $1.713 million, or roughly $1,224 per square foot, that April.

NOW

Featuring unobstructed views to the south and west, along with a south facing balcony off the living room and a parking space in the building’s garage, the 1,399-square-foot unit returned to the market priced at $1.345 million this past September.  Reduced to $1.245 million in December, the re-sale of 1177 California Street #1414 has now closed escrow with a contract price of $1.150 million, down 32.8 percent on an apples-to-apples basis despite the fact that the widely misreported index for “San Francisco” condos values is “still up over 20 percent!” over the same period of time and Nob Hill is a rather established neighborhood.

OR

With pending home sales in San Francisco having just dropped to a seven-year low and the asking price per square foot of the homes in contract across the city having averaged under $900 in the fourth quarter of 2023, which was 3 percent lower than in the fourth quarter of 2022, 8 percent lower than in fourth quarter of 2021, and lower than prior to the pandemic as well, the average list price per square foot of the homes on the market in San Francisco ticked down last week to around $970 per square foot, which is 4 percent lower than at the start of 2023 and over 10 percent below peak. At the same time, inventory levels are poised to jump.

OR, South Beach Penthouse , San Francisco, Trades well below its 2011 Price.

Look Far enough you will find the real story behind residential real estate.  People are moving elsewhere where prices are less, quality is better both in home construction and quality of life.

Rental homes need to come down in most areas to compete with the new construction developments.  $6000 for a Redwood City 1500 sf 3/2 versus less than $3000 in a gated community in El Dorado Hills for a 1800 sf 3/2.  Then think about the rent being substantially lower in the New Developments.

New Developments?  Wall Street Journal Heard on the Street, January 4, 2024 states:  "Wall Street Moves Into the Neighborhood". The "Mom and Pop" dominated rental market has a competitor.  Institutional Investors now own 55% of the rental market and they are not stopping.  Wall Street is building new neighborhoods.  they are building newer, better equipped homes with managers who listen to calls, not ignore them.  The interiors are hard wearing to tolerate movement. When movement does it occur it is after 4 years on average.  Whole communities keep construction prices down, hallways and stairs are large to accommodate movement of furniture.  

America is short 2-4 million homes and Wall Street and Developers are here to answer the call at reasonable prices for rent and purchase.  

Nothing Like Change!

As before, call or write for any question you may have and think of me of your "in the know real estate professional".

the Problems are the Path: Notice of Default Opportunity in Multifamily Unit

 

Startup bubble fueled by Fed’s cheap money policy finally burst in 2023

PUBLISHED THU, DEC 28 20239:00 AM 
• After years of record venture investments tied to low interest rates, cheap money has stopped flowing in startup land, leading to high-profile failures.WeWork and Bird declared bankruptcy in 2023, while pandemic plays like Hopin and Clubhouse faded into oblivion.“Prediction: 2024 is the year we finally bury the class of ’21 ZIRP ‘unicorns’ and start talking about a new crop of great companies,” Jeff Richards, a partner at venture firm GGV, wrote in a post on X.
• Easy Money created more risk than the inexperience entrepreneur.  The plan would to go back for more money when problems erupted.  Then came higher interest rates.  Failures, bankruptcies followed with empty offices and work from home.  Nothing new here!
This year, it all unwound. With the Fed lifting its benchmark rate to the highest in 22 years and persistent inflation leading consumers to pull back and businesses to focus on efficiency, the cheap money bubble burst. Venture investors continued retreating from record levels of financing reached in 2021, forcing cash-burning startups to straighten out or go bust. For many companies, there was no workable solution.

What is left are struggling real estate investment companies formed in 2020-2021 who now find themselves with loans maturing without and viable financially affordable choice.  Real Estate Property Taxes are not paid, negotiating with lenders fail, Notice of Default is the resultant outcome.

It is now time to begin to make the readers aware of the opportunities that exist.

NOTICE OF DEFAULT:  Recorded November 8, 2023 8:27 am, $1,764,469.01

12 unit multifamily apartment complex with 6 rented and 6 remodeling.  Unit has issue with ground water and requires subdrain or drain field installed.  Permits taken are questionable.  Planning department has mandatory occupancy requirements due by January 11, 2024.

Listing price $2,595,000.  Value on current rental Net Operating Income with 5% cap Rate = $2,222,390.00.  Proforma Value at 5% cap rate after improvements + $3,970,680.  (Estimates only).

Interested parties call 650-743-7249, write gary@mckaeproperties.com, text 650-743-7249.

Non-Disclosure Document required of all interested parties and will be provided before full disclosure of any details.

•  

The Problems are the Path: FED Speaks, "Much Ado About Nothing"

 "Much Ado About Nothing" is the title of a well-known play by William Shakespeare (1599).  The phrase was assimilated into the English language and used when someone is overreacting and makes a big deal or fuss over something unimportant.  

The Fed voted last week to hold rates steady once again, and its updated projections showed an expectation of three rate cuts in 2024. That caused a rally in stocks and bonds, with the Dow Jones Industrial Average jumping to a record high.

“It’s not what you say, or what the chair says. It’s what did they hear, and what did they want to hear,” said Chicago Fed President Austan Goolsbee said on CNBC’s “Squawk Box.” “I was confused a bit — was the market just imputing, here’s what we want them to be saying?”

“The market expectation of the number of rate cuts is greater than what the SEP projection is,” Goolsbee said.

Three Rate Cuts, to me, means that the FED is opening a safety valve in the event of a crisis in which the FED must step in and be the lender of last resort.  This does not imply Happy Days Are Here Again and we are returning to 0% rates again.  

The reality is interest rates are remaining the same and they will remain the same until the FED believes inflation is behind us or is appearing to be beaten.  

Mortgage rates will remain high, from a historic viewpoint.  Interest on credit cards will remain high all loans whether the asset will remain high.

Goldman Sachs has stated that the Residential Real Estate Market will be flat for 4 years.  Goldman forecasts FED to achieve soft landing in 2024, housing starts and home prices will tick higher while existing home sales will remain flat. 

Real Estate Investor and Mentor to the Residential Realtor community stated that the "US is entering the greatest real estate correction in my lifetime": Going to at epic levels".  The era will offer great opportunities for individuals to grab trophy properties from institutions that has never happen in our country.  

This may not be the return of 2007-08 when foreclosures on the market at highly discounted prices. It will mean that institutions or Commercial Investors of all sorts will be pressured by their maturing debt to sell at discounts that will allow buyers returns on their invested cash that matches returns on short term Treasury Bonds.

Will the FED control the Real Estate market or will it let the market regulate itself.  If the FED allows the Real Estate Market to regulate itself.  The FED will step aside and lower rates that fits the circumstances not the desire of investors and the Media supporting investors.  

The First Step is Rent Control that is going on numerous ballots.  Once that happens residential values stop going up and start consolidating.  

The FED's action and the subsequent rally in Stocks, Bonds and esoteric asset classes has in reality taken liquidity from the market.  Money held in saving vehicles went into those assets and out of the hands of consumer items to be purchased.

We have already been seeing prices or residential real estate sliding from list price to sales price; irrespective of the location.  Affordable homes have been the most resistant, but still seeing lower sales to list price with days on the market increasing.  The speculation or best stated the over pricing of homes by both seller and buyer has seen some dramatic cuts.  Movement to locales with lower entry levels in residential sales are becoming more noticeable and reportable in the Media.  

Commercial Real Estate still remains to be the best investment opportunity that Mr. cordone has referred to.  Too many novice investors without staying power are stuck in the same situation as large institutions owners with property of deconing cash flow and net operating income to cover debt.  A condition that eventually leads to foreclosure! 

NEWS FROM ST. LOUIS FED: Student loan debt may be contributing to the gap in homeownership among generations: Nearly 50% of Millennials with at least some college education have student loan debt in their 30s, compared with only 13% of Boomers at the time they were in their 30s. This student loan debt for Millennials could be making it more difficult for them to save up for a down payment on a house.

Closing item: Rents are down 3.3% nationwide.  Softening of rents will affect home prices.  Don't expect some crisis or collapse in either home prices or rents.  The case maybe more a reality check for landlords, home sellers, and agents.  The prices they are asking are out of line with choices available to the condition of the house.  The reality check will be seen in Zillow Estimates and other real estate on line services who use algorithms.  The numbers are just past over priced properties to create estimates that will no longer be valid going forward.  Remember high interest rates will slowly erode confidence on spending or overspending.  The end result is to be selective in home purchases, negotiate and investigate. 

As before, call or write for any question you may have and think of me of your "in the know real estate professional".

The problems are the Path: Man Plans GOD Laughs

 I love that phrase.  Its origination is a mystery to me, it could have come from something Biblical.  Throughout my career there are numerous times when chaos was created, that GOD was laughing at the plans of Man. Ladies, don't get offended.  Biblical references all reference Man not both sexes ( the main reason I think this is a Biblical Quote).  In fact, I doubt if chaos would have been created if Woman Planned.   

The past plans of Man of lower interest rates being a new normal has created chaos for those both of minimal net worth and experience to those of substantive net worth and education and experience to fall into a crisis of credit and net worth devaluation.  The Trillion or so dollars in Office Building Debt that is supposed to come due in February 2024 is one example of the plans of Man that go awry.  The expectation that both office buildings would remain full and rising rates were guaranteed were matched with add on loans that were short in duration or worst variable rate loans.

1. Plan #1. Rapid rise in interest rates would confine consumer spending and corporate profits and cooling a Red-Hot Economy.  It has not worked out.  Homeowners refinanced mortgages at low rates.  Corporations borrowed at low rates.  The large cash reserves created by the lower rates were put into Government short term debt at +5% rates.  GOD Smiles!

2.  Plan #2. Add to debt using lower interest rate add on debt expecting to refinance all debt at lower rates.  The rate rise created chaos.  Owners face inability to cover debt payments with drop in occupancy of office buildings. Debt refinancing is at higher rates.  New rates and financing will not be covered by income from property. GOD giggles.

3. Plan #3 Investor Groups create investment pools to buy, fix and flip commercial properties and single family rentals.  Property construction costs uncover expenses not planned, market softness that will not cover total costs, lenders refinancing rates too high to cover costs.  Add to this investors were looking for short term investments not longer term developments.  GOD Laughs

4.  Plan #4. FED plans on rate rises will stop rising home prices and month rent.  Rents continue to rise and home prices are not falling to plan.  The refinancing of mortgages leave owner reluctant to sell and loose the low rates for newer higher rates.  GOD Continues to Laugh

Rental Houses Aftermath

Investors have been shedding rental properties from the period 2017-2022.  California with the most single family rentals in the nation at 15% or 2.1 million units lost 87,548 units.  Across the US the only states that have had an increase is Texas, +53,414, Alabama, +7473, Mississippi, +1747, New York, 6017, Montana. 3753, Oklahoma, 1818, Maryland, 1471, Rhode island 3251.

Who owns houses taken off rental?  California ranked #1 with 6.8 million units, 9% of US total.  Texas is at 6.3 million, Florida is at 4.8 million, Pennsylvania at 3.4 million and New York at 3.2 million.  California added 400,768 owners of single family homes in the past five years, a 6% gain.

Bottom line it is a movement from Weak Hands to Strong Hands as single family homeowners with a 10,20,30 year time frame think long term and hold residential real estate.  Speculators added to GOD's laughter. California still retains the title of most rentals in the US at 23%, down from 25% since 2017 versus 18% in the US.

Liquidations of real estate in the Bay Area has the distinction of the "Most In The Red Sellers" in the country.  One in eight sellers in this part of the country have taken a loss.  That may be a small number when the losses from the Commercial Real Estate Market take hold.  From small commercial properties of less than $10 million to those of hundreds of millions of dollars and more have yet to be totaled.

According to Redfin from August to October 2023 the average loss per sale in San Francisco and San Mateo county was $122,500.  Lesser in other parts of the Bay Area, but still a loss.

Zillow continues to forecast lower home prices, minus 2%-minus 5%, throughout the US in 2024 with two exceptions Phoenix and Tucson Arizona and South Pines North Carolina.

2024 will continue to see lack of inventory, some weakness in sales prices that will be depend on area to area.  Demand will fluctuate for location within a city or town, to location within a state to location within the country.  Demand will be affected by interest rates and mortgages.  At present there is a 52% chance the FED will lower rates by May 2024.  52% is not something I would make a long term decision on.  A slight % in a flip of a coin!

Don't make your real estate decision for the short term.  Think long term like the recently deceased partner of Berkshire Hathaway, Charlie Munger, think 10,20, 30 years out.  NO MATTER HOW OLD YOU ARE!

Buy real estate that you can create value, not fully valued, if you are cost and value conscious; irrespective of, it being commercial, single family rentals or single family residences.

As before, call or write for any question you may have and think of me of your "in the know real estate agent". 

The Problems are the Path: Opportunities in Commercial Real Estate

Year end pressure to sell is compounded by high interest rates and the desire to eliminate costly unprofitable investments appear in the large commercial projects and the smaller projects.  It takes some research to find an opportunity among the offerings. 

Hedge Funds, the so called Smart Money of sophisticated investors, have expanded on their bets that interest rates will go higher than they are now.  That bet is levied via short positions in Government Bonds.  A short mean they sold something that they bet will go down in value as interest rates go up.

That bet will be a financial reward to hedge funds, but will turn to be a liability and loss to Commercial investors who own commercial property with variable rates or mortgages that are maturing within a short time frame, say 6-months or less.

It is well publicized the Billions of dollars in debt that will mature next year for the Office building across America.  There is little in the news that deals with all the smaller transactions that have the same difficulty. What compounds the maturing debt in the smaller transactions of less than $10 million is the ownership by Private Equity.  The Wall Street Journal recently had an article on We Work.  We Work was an idea created to take advantage of empty office space to provide an environment to entrepreneurs looking for office space to create business models in high tech and related industries.  All was well for the idea.  Interest rates were low, ultra-low.  Investors were seeking anything that would give a return that would make up for the loss of higher interest rates.  The offer of forecasted return by real estate was readily accepted by many large investors.  We Work boomed.  The money flew in and the money flew out!  in the end the founder of We Work was replaced for his extravagance.  We Work eventually failed as entrepreneurs found working from home a far cheaper way for their business work than paying for office space and commuting during the pandemic.  We Work buildings went the way of  many office buildings in America.  Vacancy to a point cost of carry became a negative.

That scenario is the same for the smaller commercial properties.  Private Equity funds found ready investors among individuals and smaller institutional type investors as pensions and trusts to fund dreams of high returns secured by real estate.  The process is simple.  Raise millions of dollars to buy small commercial projects; such as, office buildings and apartment buildings.  Place each investment in a pocket in the master Limited Partnership, management by a corporation to protect the managers.  Each pocket would be a Limited Liability Corporation to protect, or at least try to protect the Master Limited Partnership, the Private Equity Fund, from foreclosure risk.  Buying property would be financed by a mortgage that would be financed by another Private Equity Fund.  The financing would be at higher rates due to the fact many traditional lenders would not want the risk associated with a single property within a Limited Liability Company.  Traditional lenders want security.  Private Equity Lenders want high returns to their investors.  The risk is managed by short term borrowing or notes. Their investors were also seeking high rates of return to replace the low yields available by risk less returns in a low interest environment of the 2020 era.  The short term notes rolled and returns came to investors and managers.  All were ecstatic and more money came in.  Investment Managment Funds search for more and more investments.  Eventually the choice became thin and thin until more risk was taken.

Commercial properties are different from residential in one big way.  Residential have State of California requirements of FULL DISCLOSURE.  Commercial real estate does not.  Buyers must perform their own inspection, most of which is a contingency after an offer is accepted.  Buyers cost are their own cost. Discoveries that would cause a increase in cost to buyer are then accepted or the price is adjusted. If not accepted buyer and seller go their way.  Seller deposit is returned and the cost of the investigation is the buyer's sole expense.

Small Businesses are the heart of America's Economy.  That is why their is a Small business Association formed by the U.S. government with various loan guarantees to help small businesses in America form and thrive.

It is those Small Businesses that buy, develop, manage and sell small commercial properties and residential properties in America.

Opportunity lies with those Limited Partnerships formed during the low interest environment.  Does management have sufficient experience?  Was the property on the edge of profitability?  Were permits taken for all the improvements?  Was there an "Oh Oh" moment when a wall was taken out and Black Mold was found?  Is the "Oh Oh" moment the realisation that the higher interest rates threaten profitability or create a loss?

To all those questions lies opportunity.  Opportunity exists when fear is high.

WeWork filed for Bankruptcy November 6, 2023!

As before, call or write for any question you may have and think of me of your "in the know real estate agent". 

The Problems are the Path: 1980's Recession in Real Estate in 2024

Well Fargo has come to my way of thinking that the rise in interest and the resilience of the public to higher interest rates with their large cushion of cash from the Pandemic will put the FED in a longer period than all expect of high interest rates.

Wells further states that the longer period of 8% mortgage rates will have an effect of dipping real estate into a recession.

Agreed there are a number of RoadBlocks for 2024

1. Political Unrest and the Global Economy
2. Influence of Hybrid Work
3. Housing Shortage
4. Artificial Intelligence
5. Labor Shortage
6. Migration
7. Real Estate Armageddon: The economy, interest rates and inflation coupled with large amounts of debt coming due in the Federal Calendar and Commercial Real Estate
8. Supply Chain Logistics and Onshoring
9. Pricing Resets of Cost of Capital Decrease Real Estate Values
10. America's Aging Infrastructure

To prepare Home Buyers a lesson in Home Mortgage Selection is highly recommended.

Here are some of the mistakes Home Buyers make when selecting their Mortgage

1. Focusing Too Much on Interest Rate:  Ultra Low Rates harbor fees that are often hidden that will ultimately have them paying more.
2. Assuming the need for a 20% Down Payment: The Average down Payment in the US is 6%, Fannie Mae has 3% down mortgages.
3. Assuming a Loan can be Obtained Instantly: Not So!  Take time to find the right lender and be prepared for paperwork and time answering question from Underwriting
4. Pre-Qualification DOES NOT MEAN You have a Loan!
5. Consider First Time Buyers Loan Programs
6. Failing to Check and Repair Credit Scores of BOTH parties to the loan
7. Picking the Wrong Type of Loan
8. Underestimating FEES beyond the Down Payment
9. Be Prepared for a Low Appraisal
10. Not shopping for the Right Lender

The thought that interest rates will drop and everything will come back is like the belief "Buying the Dip" in real estate will always work. Dropbox in giving up 25% of their Office Space for $76 million.  This is not the first and it will not be the last.  So prepare and do your homework!

As before, call or write for any question you may have and think of me of your "in the know real estate agent".