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Who knew Coyotes could swim? Yet there one was in our backyard across the bank. And he or she leaped into the water and swam to the other side. Smoother than Michael Phelps if I say so myself. Luckily, we have a small, fenced yard. I grabbed our cute little 10 pound Cavachon, Chloe, and headed for the house. Check out my video evidence of the coyote here!
Alligators, Bobcats, Turkey Vultures, Wild Boars, Sharks. Florida has it all including scary renter snowbirds maneuvering on the round a bout, which are the most terrifying of them all.
Putting your money in a safe place is the news du jour from the banking situation, rates and even raucous children who are making their parents literally nuts.
Commercial real estate has a more direct impact from SVB but residential not as much. If anything, it’s helpful for the real estate market in a few ways. I talked about this very subject this week on CBS NEWS: What the Increase in Interest Rate Means for Buyers and Sellers.
First, is that real estate is real. It’s literally real. People and dogs like my cutie pie, Chloe, want safety when there is perceived danger. Some buyers became nervous about tightening lending requirements. Many want their funds in a tangible asset. Real estate offers that. Fannie and Freddie are also in conservatorship and not public companies. Both take up the majority of mortgage backed loans which takes a lot of risk out of play.
Second, people are also putting their money into 10-year treasury which is the benchmark for what mortgage rates are set at. While interest rates went up a quarter of a point, the mortgage rates are more tied to the 10 year Treasury yield. When more people buy treasuries, the yield goes down. Banks then borrow for less and the savings are passed on to the end consumer with lower mortgage rates. Note I avoided advanced economics class, but I did double check this with a grammar school friend who went to Harvard and Cambridge and is in this business. He went into the difference between bills, notes and bonds. Some are short term and some long term but all play a factor along with supply and demand. He approved my message so I’ll give you his information if I goofed any of this up. As of Friday, the 30 year fixed mortgage rate was down to 6.38%, down from over 7% on March 9th. Woo-hoo if you are buying or selling. The closer we get to 6%, the more activity we get.
Also, if you’ve tried to get a loan in the last decade, you know there are much tighter regulations. It’s one of the reasons we aren’t going to have a foreclosure situation. Not only is there just 980,000 active homes on the market nationwide (compared to over 4 million in 2009, people are excellent on paper with those “Precious” 3% interest rates. Gollum from Lord of the Rings is not giving up that “Precious!” The Fed wants to curb inflation and has indicated by only going up a quarter of a percentage point and by saying they don’t expect big hikes, that the rates are slowing down. A mortgage broker I know thinks we should see rates in the high 5% arena by the end of the year but it’s so hard to tell. The Ukraine conflict is causing China to support Russia. Tariffs are in place, and we are manufacturing more domestically but not buying from China also means the end of the $3 t-shirts at Wall Mart. Dammed if you do and dammed if you don’t. If you ask me, the year over year lack of activity and low home startups will cause ancillary products that depends on housing to stagger in sales. This should help lower inflation.
As far as the real estate activity, our sales are way up. March and April closings for Echo are 20% more than last year. We put a lot of good systems and ‘back to basics’ operations in place. I thought maybe we were an outlier but it’s more of the fact that we are beating the market and the market also doing better. New Pending Sales in Palm Beach County in February were only – 5.4% less than last year at this time. Not all homes that go pending stick but overall this means the March and April numbers should be surprisingly favorable.
Inventory is way up compared to last year although it’s still relatively low. Medium sales price went only up 2.7% from last year (really down if you consider 6% year over year inflation). Sellers have to negotiate. Last year prices were an astounding 100% of ask. This February is 93.8% of asking price. The stabilization of prices, no land inventory left in prime areas, less new construction options, is causing people to move. Plus, wants are becoming needs. Last week I told the story of a couple with a 1 ½ year old and 3 ½ year old crying UNCLE and purchasing. They originally held out for a year. When the baby was just a 6 month old along with a 2 ½ year old, the 1200 square foot home at 2.378 rate was manageable. A 1 ½ year old is different than a baby though. The toys got BIGGER. The kids get LARGER. Stress is CRAZY. Waiting for rates to come down wasn’t happening. The good news was prices stabilized and a compromise decision was made to go for a less expensive 2,000 square foot home instead of the dream 3,000 square foot home. They also kept the “Precious” 2.378 interest rate home as an investment property. They both have good jobs and if rates drop or they save more money they will make the big jump then.
That about sums it up.
‘Beep Beep! So, as the Bugs Bunny and the Road Runner also said to Wile Coyote, ‘That’s All Folks!”
Jeff Lichtenstein, originally from Chicago, got his start in the home furnishings textile business where he traveled over 35 weeks a year selling fabrics. After the family business was sold, Jeff moved to Florida and became a real estate agent. Today he is the owner and broker of Echo Fine Properties, a luxury residential brokerage voted best brokerage of the year. Jeff manages a non-traditional model of real estate that mimics a traditional business model. Echo has 80 agents, an average of one million dollars per transaction and over 500 million in annual sales. Between traveling for work and annual family trips to national parks with his wife and 2 now adult children, Jeff has visited 49 states. He is also one of the few Chicago White Sox fans you’ll ever meet. Some publications he has been quoted in.
Feel free to ask him a question directly at [email protected] including a complimentary real valuation of your home.
Posted in Finance, Jeff's Journal, Market Updates & Statistics, Real Estate Tips on March 25, 2023 at 7:08 am.
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Echo Fine Properties, winner of Best Brokerage of the Palm Beaches in 2020, 2021 and 2022, is located in Palm Beach Gardens, Florida. We are a family-owned local brokerage that prides itself on having the finest full time luxury real estate agents who know the area backward and forward. Each agent is hand selected to join us for their knowledge of the area including golf club communities, gated communities, equestrian and ranch estates, condominiums, and waterfront and boating estates. Echo is unique in real estate in that our company pays for all marketing, advertising, and all support which is handled in-house. WE PAY, which lets the agent concentrate on our customers. Unlike other firms, agents never have to compromise the marketing budget. Our Home ECHOnomics Guarantee offers an unheard of 57-promises. This website consists of 5 separate MLS feeds, giving 100% accuracy ranging from Miami to Fort Lauderdale to Palm Beach to Martin County.
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