Good morning to Holiday joys and the season of sweet spot Investing;
Commercial and Residential Lending
The Business and Investor Side of Our Business
In the Lights of the Holiday Season, this will be my only mid-month note.
Good News Today: Interest rates have taken a needed move lower. This is positive news!
More Good News: This month’s numbers continued the downward trend we have been expecting. Even more: The lagging “housing and rents” continues to move the overall blend rate, lower for the year. Why Good? The Federal Reserve prioritizes core CPI.
1) Interest rates: Rates are a bit lower in response to last weeks inflation and unemployment numbers. As a result, the 10-Year Treasury – a key measure – has dropped into the high 3’s. Other indexes have moved similarly. Credit cards and Home equity loans have shown no movement, as both are tied Prime interest rate, a rate controlled by the Fed. With this, there are initial discussions of the Fed dropping the Prime in 2024. A nice reality to anticipate.
2) Residential Real Estate: Cooling numbers speak best to what’s often called a typical seasonal movement. Keep in mind, the supply side of house, is running about 1/2 of the pre Co-Vid days. This helps moderate the downward tug of higher mortgage rates. Of interest: All of the specialized groups tracking the values of homes –- in America – are posting a 6 – 7 % value increase in 2023. (Case-Shiller, FHFA, Black Knight / ICE and Core Logic)
3) Commercial Real Estate: Dynamic and dicey market, with “splintered” being a good description. Location, property type, leverage, cash-flow all feed into the specifics of each properties performance. Jobs expectations and Federal Reserve policy will weigh on commercial real estate for quite some time. Good News: We know how to navigate these choppy waters. Call today.
SPECIAL NOTE: Foreclosure Help. For some commercial Investors, time is needed to work through the financial distress – triggered by CoVid – and the impact of rising lending costs upon company balance sheets and cash-flow statements.
As a result, tough choices are being made to stay the course. For some, that time is now! In light of this, we are actively working with commercial property owners and lenders. Why? To help negotiate needed modifications to maintain any current underlying loans.
The goal: Keep the property in the hands of the investor and thereby avoid issues surrounding default. Even more, this is a benefit to the banks, as well.
The challenges we address and renegotiate for our clients:
Commercial loan coming due,
Valuations dropping below guidelines,
Income no longer supports the current loan and operating expenses,
Payments are behind
If this can be helpful to you or someone you know,
please call today. Each day matters.
Good News: Commercial investing, as a whole, is quite diversified, thus able to match and meet most commercial investor’s financial goals and interest. Our goal: Matching our clients with the best lending options and customized programs. Let’s talk, today. Early prep is key.
Call us. We are ready to help today.
Economic News Helpful for Commercial Investing
and, the same statement applies for our Residential work!
Banking and Financing: DIY or using a Broker.
DIY: Benefit: You can trade on your historical connection with your Bank. Downside: You are not always sure they are actually getting it done. The Bank loan agent brings the deal in the door, but they are not allowed to tell you the percentage of actual closings.
Broker: Downside: You do pay a point (Except with SBA and residential lending). Benefits: Our connections to lending sources, interaction with industry groups, and continued conversations with our peers. This brings about true and open competition able to quickly adapt to the shifting landscape and your unique situation. Do you benefit from hiring Mike Ryan? Time proves to be Yes. And with future challenges ahead, all the more reason to call. As a Broker, your victory is my win.
General Commercial Market: The recent JOLTS report continues to show lower job openings, yet we have a steady employment market. With the average pay increase for job changers down substantially from the peak year of 2022, fewer employees are leaving. The cost to on board new employees continues to keep employers from reducing head count. Better to hold onto a good employee head count with the economy not in free-fall.
Apartment Sector: This sector is in a period of lower new supply, due to known financial headwinds. “New” rents are flattening and easing in some markets – labor supply, increasing cap and interest rates, and more restrictive lenders. With this, current “new” building starts for apartments, is down 40 % YoY. And though Apartment rents are finally showing signs of cooling, consider the 15 % increase in completed units. This growth in the supply-side of the equation does help in stabilizing prices. Going forward, history says to expect the pent-up demand of more “new” units, as the economy swings up again.
Jobs, jobs and jobs: Searching for signs and reading recent commentary on the labor market?
“For the week ending 12/8/23, initial unemployment claims were a very low 202,000, barely above decade lows. However, continuing unemployment claims came in at 1,876,000. Filings down 20 K from this time last month with continuing claims up about 40 K from last month. This indicates layoffs are very low, while those unemployed – looking for a job – are finding it increasingly difficult to find employment. Such is consistent with a cooling labor market.”
I have to note the relevant piece of data: the continued claims… “up about 250,000 from the decade lows set last year.” A 14 % increase. This level was attained just last July and the period of Jan – April this year. Let’s hope the Federal Reserves see this data as good news.
Good News:
Our commercial successes continues. The depth of our lending partners allows us to work with certainty of execution. We are getting it done, because we know how!
From business-purpose loans – with light documentation – to re-development building projects for housing and commercial property purchases. How does this work? It works because of who we are. We offer a broad range of lending partners able to provide flexible loans, excellent programs, and great terms. It is how we help move your life forward and our track record shows it. It is what keep our phone ringing. Let’s talk. We can help.
Consider Loans coming due. They are in high demand, as evidenced by our increased work to refinance various commercial properties. Recent statistics show 30 % of maturing loans were refinanced, 25 % were modified and 40 % are in default. NOTE: We can help with loan modifications. In the meantime: Check loan parameters and due dates, and don’t miss the annual lender requested financial statement. Key: Stay ahead of coming dates to keep your lender smiling. Let’s talk. Good organization is most worthy.
Good News: We have great lending partners. They respect our work and attention to detail. This is good news for you, as they trust our approach and loan packages. In response, we carefully strive to maintain the quality of their depository relationships. This is called team chemistry and is what makes our lending relationship, a winner. Join our team.
You have heard me say: It starts with a first conversation. Let’s talk.
Enjoy your family and friends this season. With all the financial parts I talk about, the most important part of life is who we have around us. Be well and be safe!