Good morning to a break in the heat;
Commercial Lending
The Business and Investor Side of Our Business
Moving closer to Federal Reserve policy targets, there are signs of a softening of the economy, as was the desired response. But this also means a loss of jobs, companies shutting down vs. expanding, especially small business. With this, consumer sentiment continues to decline.
The past months reports makes the point. Unemployment rate is inching up; Company bankruptcy filings are increasing: and wages and rentals increases are easing, year-over-year.
As further supporting evidence: 1) reports show homes remain on the market longer, and 2) a slowing of closings. Yet, the overall the data still shows very strong numbers. Days-on-market still strongly favor a ‘sellers market’, with available supply still well below market averages.
The Economic Narrative:
1) Interest rates: The big numbers concern inflation. In the latest CPI report, focus on auto insurance and housing is critical. Finally, we are seeing year-over-year numbers cooling. We should have a couple more months to confirm this trend. Federal Reserve is watching.
Looking at the 10-Year, the range remains between 4.00 to 4.74%, since February. Good news: we are currently trending under 4.20 %.
2) Residential Real Estate: With increased inventory and prices dropping, MSM loves banging the drum of fear. Yet, if one were to look at a couple lines in the reports. We are coming off of extremely low numbers. Consider, an increase of 10 % from a thousand listings is not as significant as 10 % from 5000. Take such numbers as facts, yet we then need to add further perspective. The listing price per square foot is up 5 % year-over-year in the west, with yes, a 10 % increase in inventory. If we may, let facts and perspective drive the bus, and not fear.
3) Commercial Real Estate: Locally, a few challenges. Too often, Chase Bank is not extending or re-writing many of the First Republic loans – some residential, but mainly commercial. Word is some SVB loans are being sold off, then having the same difficulties. If you have, or know someone with a FRB or SVB loan, please..please call me. We have the broad base of lending partners to facilitate financing. Don’t let fear mongers lead you astray.
My prediction: We will continue to ‘kick the can down the road’ until 1st / 2nd quarter next year. Until after the election. The free market will then be able to flush out much of the damage, beginning with the first year of a new presidential term.
4) Apartment: Latest news clips point out the large reduction in future apartment construction. The usual comments to why: land supply, financing costs, labor costs, Yet ignoring we have 915 K multi-family units under construction, with half this in the permit stage.
My perspective: Short-term, the current number of units coming online will bring a temporary market saturation. Why? Rents are relatively flat, inflation higher, and concerns about job and wage growth. Fact remains, we have a good supply coming online Thus the singular arguments of high costs, etc., just don’t wash. Builders have been building. Market math: If rents are going up – more than inflation – build. When rents are NOT keeping up with inflation – dial back. Just sayin’
Call us. We are ready to help today.
I hope you find these insights regarding our economic news, most helpful for Commercial investing and our Residential work! Key to Both – Discipline, Preparation, and Patience.
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: Yes, 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.
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 have the proven credibility !
An area we are receiving the most calls: Business opportunities. We are 3 years out of the CoVid disruption and many are doing well. A lot is going on in the investing market – AI expansion to name one. Regardless the challenges and the new frontiers, there is one constant. We dig deep in seeking solutions for the unique projects of our clients. Who do you know scratching their head, regarding a project? Call us ! Now is the time to begin the process.
Consider as well, the breadth of our lending, from 1) business-purpose loans – with light documentation – to 2) re-development building projects for housing, plus 3) 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. In todays market of risk and uncertainties, it’s key to check loan parameters and due dates. For certain, don’t miss the annual lender requested financial statement. Key: Stay ahead of coming due dates to keep your lender smiling. Good organization is most worthy.
Yet, if you have troubles, please note: We can help with loan modifications
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 today.
Enjoy your family and friends this Spring season. With all the financial talk, key is who we have around us and with us. Be well and be safe, knowing we are here for you.