Your May 2023 Letter From My Heart, with the Good Bad n’ Ugly

Good morning to April – SPRING has arrived;

Don’t Wait – Prepare Today !!

Enjoy the Home Buying Experience

Real Estate News Tracking Our Market.

Recent News and Expectations for 2023:

Perspective: News and perception often rule over facts and figures. Consider in particular the demise of First Republic Bank. Full disclosure, I have banked there for decades and many I know, sought mortgages from there. Why? They maintained a strong balance sheet – high credit, low debt to income ratios, low loan to values. With this reputation, First Republic sustained a solid reputation. So, what is the problem? How assets /cash were allocated.

This is a bit confusing due to what is called ‘Mark to Market.’ Here, one buys an asset – a US Treasury or Mortgage backed security – then asks what is the asset worth in today’s – if these same assets had to be sold in this market of rapidly rising rates. This is a big “IF” scenario, that risks a false panic, one failing to consider things that matter – bank stability, perfect pay history, high quality of underlying assets. Quality of management needs careful consideration.

I am not in a position to detail SVB or Signature, but can say that many other banks took specific positions in particular niches – including the Big 5. For years, Wells Fargo offered below market interest rates on mortgages, to those bringing substantial investment assets. Chase Bank has a huge business in Apartment loans. The question is the discipline of bank management –its willingness to tolerate risk, accepts diversification, and being flexible.

Bottom line: The ripple effects are not done. What we do see, is a dramatic shift of money from regional banks back to the Big 5. It happens when fears lead logic and careful reasoning. At least that is my perspective.

Value of single-family homes: Home values carefully consider “Supply and Demand”, as well as future expectations. Let’s look at Santa Clara County, as an example. The past 5 years saw gains of 6.64 % per year, 8.35% over 10 years, and 6.6% over 60 years. This includes the Baby Boomer explosion, military expansion, and tax polity enticing many industries and people to the Bay Area. Such great employment within the high-tech opportunities and the weather – supported by a new life-style – brought massive building growth.

What followed were major increases in wages and a significant demand for housing, in the face of a limited supply of land. This supply-side reality came home to roost in Silicon Valley with appreciation gaining steam with rising wages and technological innovation.

The primary cause for the slowed down – comparing 5 year to 10 year – was the Covid confusion and response. Now we wrestle with recovery and a return to normalcy. The Good News: the potential for home prices to again show positive increases. However, what constrains the recovery is a combination of fear, expected recession (fewer people trying to move) and inflation eating at disposable income. Bottom line: If not for a lack of available land and limited housing supply, I would have expected bigger declines home prices.

On a more regional and national front we have challenges with Builders stuck in the middle.  Cost to build too high with the interest rate increases, but inventory to low for the market.  Ouch.. more pressure for prices to increase.  Housing up 2.7 % and permits up a tad.  Multi-family taking a bigger hit down due to cost.  Household formations running about 2 M per year.. that needs to have new build supply to soak up.  But the current supply chain is running a bit less than 1 M per year.

Employment / Unemployment: Wage gains beginning to ease, though still positive. This weeks ADP report and BLS Jobs report will be insightful and likely show continued softening.

Bottom Line: Start Preparing Today With Mike Ryan & Associates

Key to Success: Stay disciplined, prepared and ready to act. Let your Realtor – and the Seller – know of your readiness and commitment to buy. It is a strong step in turning your dreams into reality. For certain don’t let the “All Cash buyer” be of concern. Most Sellers tend to prefer the real life experience of a traditional Home Buyer. Why? Because Homes are personal and family is key to the American heritage.

Let’s Talk Today

Be ready today. A strong loan application is a winning attitude.

It strengthens your Realtors efforts in selling you and your offer

as the winning offer.Being “best” prepared is sound advice.

Interesting News We Can Use

Interest Rates: We are looking to the May 10th report on inflation. It may help support an easing of mortgage rates. Of interest: Rents. They are a significant factor in determining our inflation numbers. Real time shelter costs are 1.7 % compared to the 8.2 % in the CPI report. Being a year-long average, we expect May 10 to have a low number – replacing a big number. This should continue the downward trend of shelter costs. Good news: Mortgage rates are easing, just in time for the Spring Buying Season. Prepare today. Call us now. Let’s talk.

Looking to Buy or Invest this Spring Season?

Call today and begin early preparation now.

This keeps you ready and flexible. It is key.

The Good, the Bad, And the Ugly

THE Good: A perspective worthy of note:

Does America have its troubles? My answer: Best and better than most. Yes, everything in America is awful if you read headlines; except for the fact that inequalityis falling; unemployment is at its lowest since WW2 (and so is racial disparity in hiring); it’s still the world’s richest, most productive and most innovative economy; poverty and uninsured rates are at their lowest levels in history; Millennials are back on track, and GenZ are blowing past other generations in saving for retirement.

Please take a bit of time, and follow the link to Future Crunch – This is my go to source for good news. We deserve it. Subscribe and let us all get some more good news, as part of our daily bread. Then share it with others. A positive spirit can do wonders.

THE BADInflation: Interestingly, there is a some good in this month’s BAD. Inflation remains stubbornly high, though improving. This past month, the CPE headline made a nice moved down from 5.1 % to 4.2 %. At the same time, Core inflation nudged from 4.7 to 4.6 %. While hoped for improvement, yet “Housing” remains at 10 % year-over-year. This includes a big jump in utilities component.

Short term, the numbers show improvement. It is the year-over-year basis that holds the numbers high. In return, this provides the Federal Reserve all the room needed to keep rates up. For example, if the Fed viewed a month to month view – instead of year-over-year averaging – inflation would be in the low 2’s. But instead, as history often repeats, the Fed continue to drive forward, while looking in the rear view mirror.

The UglyI will side-step this month. There is enough to go around. Locally Google putting the brakes on the downtown development, the fact we need more resources to shore up our infrastructure. Everything runs on money, and there is only so much to go around. It makes me worry.

Planning and Preparation

Should one invest in stocks, bonds, real estate? Each person has a different view, often based upon comfort levels and sense of risk / reward. It is what we call the market place. It is key to one’s “planning and preparation”. It is here we bring our expertise and experience. Our efforts are to complement your perspective. Our goal: Bring a full range of meaningful options that enhance your vision, based upon todays market realities. Call today. Let’s set a time.

Why call Mike

What We Do – Why We Are Here

We know how to explore and carefully examine the many available real estate options. We scrutinize for safety and prioritize the most feasible. It is how we build a trusted relationship with you, as you grow your wealth and secure a solid future – for you and your family.

Small Business: We love small business and provide loans offering a full array of financing.

Residential / Commercial: We offer strong lenders and a complete package of lending options.

Tax-deferral strategies: Investment portfolio tend to be dynamic in nature, subject to change and surprise. It is why it is important to keep updated, as to tax law. Herein, is a key question: Pay taxes today or keep your cash, working for you? How? By “deferring projected capital gains tax”? And if keeping your capital – working for you – sounds good, let’s talk. Let’s discuss the best available options and plans-of-approach. Best: We have the professional team who know how to bring it all together. Details matter and they know all the small details.

Why: Why payout up to hundreds of thousands of dollars – even Millions – when there are tools to keep your hard earned money working for you – and your estate. Interested? If so, now maybe a good time to talk – to start planning for tomorrow. Tax planning is a good strategy, especially with new laws wanting to stop you from passing highly appreciated real estate, onto your heirs. Let’s talk. Your estate matters.

What We Do: Our role is to explain and bring clarity to time-tested strategies able to keep your money working for you. For me, this presents a solid opportunity to keep your cash and build wealth. One that is worthy and a profitable use of your valuable time. Let’s talk.

Tools: We offer multiple tools and proven methods for highly appreciated holdings. The goal: Keeping your cash in your proven hands. Our team offers highly qualified and knowledgable professionals, are ready to make it happen.

Retirement: Like myself, as we mature, real estate becomes more personal. If you agree, let’s talk. Together, we can help find answers and solutions to questions about a too soon, tomorrow. We can start today. We can address a range of questions, from working at home, to a multitude of retirement options. Our effort is to bring clarity to important real estate planning issues.

Our Purpose:

Be insightful and practical.

Work with you, finding best answers and solutions.

Always Being Straight Forward, with No Short Cuts.

Success begins with solid preparation and a proven professional – Mike Ryan. I know the ropes and am a proven advocate. I offer time-tested insights and experience. Best, I love to see my clients achieve their goals. Call us – the professional team who stands with you. Call today. We are ready.

Thank you and continued blessings.

Leave a Reply

Your email address will not be published. Required fields are marked *