Sweet’N Low versus Equal

First Things First. First, there was not First Things First at First. I’m writing this on Friday and maybe I need to move it to Sunday in the wee hours in the morning. I’m lettering my tranquil piece in peace and all hell breaks loose with the Supreme Court and the Fed and the President over Tariffs. I ask my financial friends what it means, they say, “how should I know”. The good news for me is I hated my ending and now I love it!

In a simpler time, there was just sugar. Then you had Sweet’N Low (pink & saccharin). Later came Equal (blue and aspartame), Splenda (yellow and sucralose), and Sweetleaf (green and stevia). And don’t forget Raw (brown and brown sugar). Supposedly there is Monk (orange and fruit extract), but it’s kind of like that rare use of Y as a vowel. I have yet to see the orange packet come out from its hooded robe. Sugar packets are kind of odd, as the exhaustive rainbow coalition of color schemes is like your favorite sports teams’ jerseys — or even us here at ECHO having turquoise and teal represent the hues of the Intracoastal and Atlantic.

Sweet’N Low was the first artificial flavor, and it ruled the coffee shops long before Starbucks was a thing. The name could be taken in a few ways: sweet as in a sugar high, and low as in the crash after the sugar high — quickly down in the dumps. Although Benjamin Eisenstadt and the good people at Cumberland Packing Corporation probably wanted to convey low in calories.

In real estate, we don’t like Sweet’N Low markets. 2020 – May 2022 was a sweet sugar high. The next three years thereafter were a low. Rather, I’ll take the soft blue jersey. An Equal market is a healthy market. Boring for conversation, though — when asked, “How is the market?” I reply back, “It’s meh!” But meh is good.

The reason for the equal market is that the Fed did a good job and natural supply and demand took their course. Interest rate rises that we all dislike did their trick. Take your medicine, come back down to earth — no pain, no gain. You get the drift. Three-plus years of higher rates calmed inflation to an extent. It also slowed down the economy and curbed purchasing. Thus, inventory rose and resulted in historic drops in purchasing activity. As a side note, we won’t see 3–5% rates because of tariffs and the dissipation of cheap labor, so get used to 6% being the new normal. There is even some risk right now, as the Fed has talked about raising rates this week.

I’ll get into why “equal” is good, what to expect from it, and things to look out for. Here are six things happening now and what to watch for:

1. Florida Is Beating the Trends Nationally….

Our numbers in December and January are far better than the rest of the nation. The January numbers for South Florida were good year over year. Check them out here. Much better than nationwide. The reason is our inventory rose faster, most sellers dropped their prices last spring and summer, and the market hit equilibrium quicker than the rest of the country.

2. January Numbers Nationwide

I wouldn’t put too much stock in January’s -8% nationwide drop in real estate activity because we had better-than-expected nationwide numbers in October–December. Much depends on where the holidays fall. I would expect February sales nationwide to be off some because of the frozen winter weeks that kept people in their houses. Watch for a bounce back in April. Look at the six-month and yearly numbers, not just month over month.

3. Buyers and Sellers Are in Outer Space

Some buyers think they are in the 2024 market, and sellers think they are in 2021. This makes deals super arduous. Lots of agents are exhausted from all of this.

4. Resale Rules

Watch for resales to rule the roost. Builders got rid of excess inventory and can’t afford to offer the same type of incentives. Costs will get passed on to the consumer. Resales don’t have to do that.

5. Florida Condo Market

The party is over for buyers. It will still take a number of seasons for that market to hit equilibrium. Buyers of older condos have the upper hand, but years of buyers waiting for special assessments to hit and financial disclosures to be made as a result of Surfside are coming to an end. The condo market overcorrected because of uncertainty, and purchasers today will look like they stole the king’s ransom a few years out, I believe. If you are looking to buy a condo in downtown West Palm Beach right now, what is affordable today might go up considerably in a few years.

6. Benefits of Equal

Equal is music to my ears. I can predict costs and budgets. It’s good for lending institutions. It’s good for investors to buy a fixer-upper. It’s wonderful for the consumer, as they know what they are buying. And it’s good for buyers and sellers, who eventually come around and understand the predictability of the market.

Since we don’t expect to see big drops or big spikes in rates, expect equal to stay around a bit, and inventory is quite equal. Hopefully it stays that way. The one thing you can count on, though, is that things never stay equal for long, so let’s enjoy it while it lasts.

While this Jeff’s Journal was about sugar, things can change quickly. SweetN’Low does have that musical 🎵 logo. So, in the voice of Julie Andrews, “take your spoonful of sugar with a grain of salt!”