December Letter From Our Heart

Good morning to the Holiday Season of shining smiles and bright lights,

2016 draws near to a close on signs of a better tomorrow. Home sales are strong and the rate of job growth improves. And, with signs of a stronger economy, so too interest rates are nudging higher. Finally. They are up 1/4% more than when 2016 started. It may move higher. At the same time, we will keep on eyes on inflation, European economies, and OPEC.

With every election, there often comes worries and uncertainties. Change does this. However, like turning a big ship, directional change takes time. So too our economy and the way of doing things. Whether we seek change or shy from it, two thing to consider: 1) nothing much will change soon, and 2) if watchful, often we can anticipate meaningful changes before they happen. It is one of the reasons for our letters and why are phones keep ringing.

Stat’s of interest:

  • US Bond markets are under a bit of pressure. In 2014, there was a net in-flow of money, thus lower rates. Since then, net out-flow is increasing, as have rates.
  • USDA reduces Mortgage Insurance fees. New numbers are: 1% up-front with a 0.35% annual renewal. A positive change from the previous 2.75% up-front fee, with 0.5 % annual renewal.
  • Bay Area Metro is now behind #1 DFW, in the rate of economic growth.
  • 18 – 34 age group: Numbers yet living at home is double pre-recession. This bodes well for future new home formation, especially if new growth is stimulated country-wide.
  • Nationwide: The good news is 6 years of job growth, currently the number of new jobs has nearly doubled those lost to the recession. Yet looking ahead, job applicants who lack in needed job skills is a real and substantial challenge. It appears to effect future job growth estimates downwards.

The Good, The Band & The Ugly

The Good: Jobs and the market place remain rock steady. A bump in the unemployment rate is more about people “re-entering” the job market, than actual jobs offered. Even this is good news, as people tend to re-enter the market, when there are renewed signs of finding a job.

The Bad: Prospects for future employment. New “disruptive” technologies may result in areas of unemployment and lay-offs. It isn’t all duckies and bunnies. Just ask McDonalds.

The Ugly: “Fears” ruling our day – Stock market at all-time highs, strong US dollar, rising interest rates, healthcare costs and deductibles, and even gas prices. I far prefer what FDR once offered the nation, “nothing to fear, but fear itself.”

In Closing:

Our local market has the multiple benefit of weather, universities, high paying jobs, job growth exceeding the supply of housing, and access to the world. It is the foundation for our consistent bullish altitude towards local real estate, both residential and commercial.

I am also bullish on our trust relationship with each client, built upon our “conversational” approach to planning. It is a proven path to success. It is how we turn client needs and ideas, into workable options, and from there, onto possible solutions and successful conclusions. This approach to success is a “winner”, both in times of ease and time of great challenge.

We cannot thank you all enough for the many, many conversations and referrals this year, and years past. We look forward to all and every conversations, never fearing a good challenge.

Have a fabulous Holiday Season as we remain,

Gratefully yours,

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