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As we surmised at the beginning of the tariff questions, we most likely will not see any clear directions for the next foreseeable months. It can be helpful to grasp that we the consumers actually set the price needed to turn inventory into needed cash. We don’t like the price, we find a substitute or simply wait for the item to go on sale. Sale prices are everywhere.
Don’t let the press panic you. Gas prices are down – except in CA – shipping expenses are down, farming expenses are lower. You will be just fine, as things have a way of balancing out.
Instead, let’s talk. Let’s layout what could turn out to be a very interesting Fall buying season – even more fun than Spring. There is a pent up demand for Buying and many Sellers want to move on with their lives. And with this, comes a likelihood of lower mortgage rates – inflation being controlled, US deficit being reduced, GDP growth, and tariffs adding additional revenue.
Accessing the Equity in your Home without Selling:
Little known methods to keep your home: 1) Reverse mortgage (1st loan for those 62 and older, 2nd loan for those 55, yes, 55 and older) 2) Equity share (no age limitations). Both of which have no payments required. A great way to access equity, if and when needed. Questions and more details, Call today.
Important Points:
1) Mortgage Rates: Regardless the Fed, mortgage rates have eased. Here is how. Mortgages are linked to the10-Yr treasury. Of interest is the spread between the two. The long-term number is plus l.6 – 2%. With past inflation, this spread increased to 2.7%. Now its 2.4% with room to continue moving lower, just to historical trend. Things are looking promising.
Best advice: Make this month your month to prepare.
Summer Buyers speaks to good timing and ready Sellers.
WE can show you how to buy now and enjoy rate cuts later. CALL!
2) Economy:
A) Economic Activity: GPD growth for the second quarter was a plus 3.0%. It was benefited by a sharp decline in imports of 5.6%, aided by improved consumer spending. But like all numbers, one such number is seldom helpful. Next report will bring needed insight.
B) Employment: The confusion continues – BLS or ADP. BLS numbers say one thing and ADP tells another. What’s clear: Inherent volatility in labor markets in a state of transition – Biden to Trump. The Trump Budget plan plus DOGE cuts in “public” jobs is significantly different from the Biden economy based in increasing deficit spending and total debts.
Thus and because of the significant differences in how to approach the US economy – and its‘ measurement – it is best to wait for this transition to stabilize, before over trusting generalized employment numbers from DC information machine.
3) Residential Real Estate: Quarter-over-Quarter listings are up 20 % and 6% year-over-year. Some of the hottest markets are waterfront properties.
Home sales: Down with mixed signals. Overall, a slight decline down in home sales, with some areas nearing a Buyers market. But don’t be fooled by the “Median” home price. It only speaks to a mix of homes actual sold, not actual appreciation. For example, homes over 500 K had 5,000 less units sold, while homes under 500 K, has 5,000 more units sold. This blend, by definition, reduces the Median home price.
Adding more detail: “Flippers” and buy-to-rent investors, make up 30 % of the SFR home purchases so far this year. The breakdown: 25 % to those who own less than 100 homes and 5 % to the big market players. They have not slowed down. The need for housing (supply vs demand) metrics continue to support sales, with the owner occupant sector slowing a bit.
Good news:
We are well equipped to help Buyers succeed.
Your professional expert ready to start today. Call us.
4) Commercial Real Estate: Gaining the upper hand
Excellent investment opportunities are at hand.
Call now. Let’s start preparing now
Key market factors:
1) Manufacturing Sector: Under Trump’s pro business plan – taxes, deregulation, and tariffs – new long-term investment commitments, in US manufacturing, is nearly $3 trillion. This does not include the number of new jobs, taxes, and ancillary businesses.
2) Actions or inactions of the Federal Reserve. I tend to believe rates will be cut twice before year end, but the Federal Reserve will be cautious and perhaps overly concerned with what it considers unknown. At the same time, such fears are overcome by a pro-business tax treatment of capital investments, deregulation, new well-paid manufacturing jobs, gas and oil supplies, and tariffs.
3) Trump plans favoring oil & gas production through deregulation, ending bureaucratic delays, expanded production opportunities, and trade-policy.
4) Unknown: California anti-growth approach to business investments. This includes high regulatory burden – environmental, labor, and small business – which raises cost of housing and industry. Add to this a budget deficit and rising gas prices, when gas prices should be falling, Lastly, California has the highest state income tax rate – up 13.3%. Putting a lid on potential growth.
5) Inflation Perspective: Good News Firing the head of the BLS. Let‘s start repairing how their numbers impact inflation and interest rates. One easy fix’: ‘Owner equivalent rent‘. Bogus to know what ‘owners’ feels their home would rent for. And to then use this funny “number” – nationwide – and overweight it, in the calculation of inflation. Political.
Outcome: Consistently posting higher inflation numbers than what is real. This is harmful to the economy and distorts consumer confidence. Federal Reserve and BLS need to keep out of politics. Loss of credibility and public trust can become hard to overcome. Just Bad News!
My Perspective:
As stated in the past, I like quoting Dr Thornberg: “…everything in California can be fixed, if we simply build enough housing”. This confirms jobs – not less jobs – is the baseline for the entire country. New investments in America will bring more jobs. Facts remain: Softening employment, softening productivity, softening tax revenue. Let’s hope California gets it.
For smart real estate investing, you need accurate numbers that are timely and trustworthy. I have harped on BLS for years, relying only on their QCEW – quarterly report. It does help bring a better overall perspective, yet it remains long after the fact. Why the concern? Timing. It is important when investing and data is critical – now or later, this sector or that, interest rates. So much of what we do rides on accurate facts and discerning information. We depend upon the media to print the facts. When the press, or group, tasked with providing this, fails repeatedly, it is time for change, not excuses.
Trump did so, focusing on the immediate, while not detailing the back story. Much of D.C. politics and policy have been operating based on over-stated, posted numbers. Outcome: Negotiations and agreements based upon bad numbers. We finally get a report speaking closer to the truth. This in turn, shines a light upon the historical mess called public policy. What an embarrassment. Hence the immediate removal of the person at the helm.
Note: This same “group” of embedded bureaucrats is responsible for our monthly CPI reports. Reports continually abusing weighted numbers, as mentioned above – ‘Inflation Perspective’. How soon before BLS actually changes, may take time. Sad a need to compete and wrestle with DC – whether for lending funds or accurate data – when they are called to serve us, first.
“Don’t wait to buy real estate, buy real estate and wait.” – T. Harv Eker
Our work, what makes us special, is meeting each person where they are, offering effective guidance to solid, stable, and actionable options. All with a uniquely individual flavor. Give a ring today and let us help build a solid path for you and those you care about. Patience wins.
QUESTION: Buy Now or Wait for Lower Rates
California market: Homebuyers yet on the sidelines, typically wait for a drop in interest rates. Others want more choices and alternatives. Interestingly, Mom and Pop investment property owners (3 – 10 doors) are continuing to increase in holdings – roughly doubling the market share of purchases. Renters: They too, like choices and will often live in the most affordable and preferable circumstances, many seeking SFR or duplexes – not apartments. M&P serves this market the most – not Blackstones, as often reported.
Property appreciation: Yes. Due to limited number of homes for sale, plus too few “new” homes under construction, leaving an imbalance of supply vs. demand. Outcome: Anticipate continued property appreciation. Question: Dream home found, Buy now or wait for lower rates? We can show you how to buy today, and take advantage of lower rates, later.
Is this your dilemma? Let’s talk. Don’t lose the home and location you desire. Here’s what we offer. We develop a detailed analysis and build a mortgage-options plan custom fit to your family finances. We show you how to take advantage of lower rates, if they happen.
Sound good? Call. Let’s analyze the cost of waiting vs buying, now. This is a benefit few in the mortgage world are able – or willing – to provide. Few will take this extra step. I do, because I care about your today and tomorrow. I look forward to hearing from you.
Call Today. Or, at my web page, set a time for a first conversation – at your convenience.
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More Good News – What we Do!
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In the spotlight: Another option we extended to our clients. A recent client, between jobs, with 2 in college. Major cash flow crunch with no income to qualify for a credit line – an excellent tool when unexpected cash needs arise – when only having a retirement accounts to tap. Good News: We have “equity” share options able to bridge the cash flow gap. It is one of many specialized loan tools to serve you better than the “common” options. Call today with your questions. Let’s find the lending option best able to meet your specific needs. You are unique and respected.
Have an idea not easy to pursue – Call us. We love to have conversations to flush out every potential option and method, offering you a full range of best choices.
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With all the financial talk, we look forward to being an open forum where you can talk through questions, thoughts and solutions. All in the name of what is best for you.
And what is most important: Those we have around us. Be well and be safe! Enjoy your family and friends, with thankfulness and gratitude.
