Summer Slowdown could be impacted by the Fed Rates coming up?
Summer Slowdown could be impacted by the Fed Rates coming up?
Introduction: Summer Slowdown and Fed Talks
Could the summer slowdown be affected by what the feds are going to talk about today? I don't know. We'll talk a little bit about that. The feds are going to talk today, talking about some commercial property. Again, why do I keep on hounding about this? Because I think it's one of the cards in the house of cards that might topple our economy.
Just like what happened in 2008, 2009. Homes for sale near Apple, Mountain View, home of the week, REO, home of the week, and 40 days on the market report. Let's get moving. Okay, there we go. All centered up, looking nice. All right.
Upcoming Fed Meeting Insights
The Fed meeting is in less than two hours. They're going to talk about what's going on in not only unemployment or employment, which, they're saying that it's down.
I don't know why wages have cooled, but they're also talking about what the rate is going to be in the next month and the supposition right now is that it's going to stay stable. It's not going to be cut. Maybe in September. But not right now. And then we're thinking because there's no real reason to do it.
Inflation is still going flabbergasting. And, as we go into the election cycle, it just doesn't make sense to do it just yet. What happens if it blows up? That'll blow out whatever politics this.
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Mortgage Rates and Unemployment Correlation
Mortgage rates versus unemployment rate through Q1, 2024. This kind of goes hand in hand with what the feds are going to talk about today. The reason why I brought it up is because the feds are going to talk about it today.
You need to understand there is little correlation between unemployment and rates and GDP and consumer confidence because of all that, it wraps into where the health of the economy is for consumers. One segment of the GDP, one sector of it, commercial property, just like all of these other sectors.
And these are not the only ones, but these are the ones that I've been eyeballing for the last five or six years because I think it's important for people to see the larger picture. I live in the world of real estate and I know that we do not. Outside of living inside of real estate. That's pretty much it.
That's my job. That's my industry I'm the expert in it. So that's why we do it But I also have to remind you that when I'm talking I don't talk in a vacuum I don't talk from a myopic point of view however It does Take it all revolves into this. That's why you need to take a look at these different areas, housing, credit cards, healthcare, automotive, energy, commercial, and tech.
We don't even talk about tech. Tech is hurting right now, right? It could be one of the tipping points. So just be aware that these are all things that are coming at us.
Commercial Real Estate Crisis
Commercial Real Estate Is Headed Toward a Crisis
I think automotive or commercial real estate will be the next tipping point to our next downturn, and I don't know how bad it will be, but I've been watching a lot of those movies margin call and too big to fail.
Those movies are very reticent and very. Present what's going on today in commercial real estate and the automotive industry. So
the link is down here in my blog. It's also in almost all the descriptions and all the videos that you might be watching. If you can't see it, just go click on the blog and you'll see this real quick. And it's another one. It's actually three apartments that this guy's talking about today.
More Commercial Real Estate Problems
This one specific one is 322 units. They purchased it for 333.6 million, which is 104 thousand dollars per unit. when I track cash flow right now in the Midwest, should be about 40 to $50,000 per unit for you to cash flow it. And these people bought into this lie. The whole idea is that.
You're delivered a proforma. And a proforma says, if you increase the rents, and if you improve this in the building, if you do this and this, you can go back to your residents or your renters or your lessees and say, Hey, I'm improving my property. I'm improving your land, the land that you're using.
I'm going to increase your rent. They're getting a big FU from their clients saying, no, I can't afford it. They left the commercial property owner, the landlord, and the investors are losing out. And you think about these 33. 3 million, you need to come down with 30%, which is about 10 million, 11 million.
And invest that into that property for back to put a loan on it. So if this bank forecloses on this property, those investors that invested that 10 million or 11 million, whatever the number is, we don't know. They lose it. So it's a tough thing to see it's happening and right now Harvard Business Review just came out last week with commercial real estate is headed towards a crisis.
Investors blindly, foolishly invested in all these commercial properties and they're losing their ass. You don't see BlackRock or Vanguard or Buffett buying big, huge swaths of commercial property.
Why? Because it's not a good buy right now. The inexperienced investors, the good salespeople who convinced you, or the people that have money to invest in these properties and now they're going to lose their ass in it. So it's part of life. And again, one of those little things, commercial real estate, this was done two years ago, 1 trillion lost in value.
That was just one. The aspect of it is probably up to two or 3 trillion right now because they're just losing value. These things are not going to sell for 33 million. They're going to sell for 10 or 15 percent of what it was sold for before. That's the ups and downs of commercial real estate.
So if you bought into a guru, you bought into an investor, somebody sold you on to put in 50, a hundred, a million dollars, you're probably going to lose that money.
Local Real Estate Listings
Apple house of the week Warbler. This is not my listing. 2. 6 million four bedrooms, three full baths, 1946 square feet, and built in 1955.
And the reason why is it's really close walking distance to Apple. Let's take a quick look. No, we're not going to take a look. How many days on the market? Just popped up. So give it a couple of days. If you're wondering, there are 51 homes in the Circle around.
Apple and they go from townhomes, and condos, all the way up to single-family homes. That again is listed in my blog. You can just go there. The same thing with this one is the mountain view. The reason why I picked it is because it's within walking distance of Castro.
Mountain View home of the week
Castro Street is where you have all the restaurants, et cetera. It's a nice little bungalow, with three bedrooms, and two baths. Again, not my listing, 2. 4 million, 1, 357 square feet built in 1946 and Oh, that's awesome. Love it when I have bandwidth issues, but you can take a look at it. And then REO of the week. I think I looked at this one before it's been on the market for 55 days.
It's on its way to Gilroy, San Juan Bautista. Yeah. You want a nice little country home, three bedrooms, two baths, 1, 356 built-in 19. 78. And the bonus of this one is if you do buy it, you get to evict the tenants or the previous owners, whoever they are. And you're going to have to put a new roof on it.
don't know what it looks like inside. So you're basically buying this thing sight unseen. And that's it. Okay. So real quick, let me open this up for you so you can see it. 40 days on the market. We have 187. It jumped up the market slowly.
Market Trends and Predictions
Is it slowing down because of the feds or is it slowing down? Because of summer everybody, I got to get my kids back into school. My kids go back to school next week.
It's starting like Wednesday next week, but it's like my kids are at band camp right now and they're getting ready to go back to school. So are you thinking about school or are you thinking about buying a house? That's probably why these numbers are jumping up the mortgage rates have stayed stable.
I think we're either going into a recession, like I've been talking about, or they're waiting for the feds to talk today and see what happens. But I can. Almost guarantee you that they're not going to do anything from all the articles that I read, all the people that know way more than me, they're not going to raise the rates or lower the rates.
Same thing with 90 days on the market. There are 47 of them. And the same thing with the bank. They're actually going down while this one in the Bay area, is going down and REOs all through California have gone up just a tad bit, but again, it's not a huge jump, and houses for sale have really gone down.
I think we had 533 a month ago, and now we're down 50 of that 42 and we have 84 pending and 72 closed. Same thing with Santa Clara County. We need to be at 2000 to have a balanced market. So it's not a buyer's market yet. It's pending. We have 161, which is fine. Look, it goes up and down. I think this is when we had the 4th of July. And then close, we had 143. So closings went way down. If you look at the average over the last month and a half, two months, that's because we're in the middle of summer. I don't think it's anything to worry about.
All right.
Conclusion and Final Thoughts
Hope this is helpful. If you have any questions or thoughts or you want to see other kinds of charts, did do another chart yesterday. can't find it.
don't know why it's not showing.
There it is. Yeah. We talked about tempo yesterday. That's it for now. Wednesday, July 31st. Happy last day of July, everyone. I'll see you tomorrow. I'm Vito with Abitano. We'll see you out there.
Vito Scarnecchia Real Estate Broker, Veteran, Dad DRE#: 01407676 We’re Hiring! 408-705-6817 Vito@abitano.com Website: abitano.com https://www.onereal.com/vito-scarnecchia-1 update your home value: https://hmbt.co/bT7qRJ RELOCATION@ABITANO.COM FREE DESKTOP APPRAISAL https://www.propertyrate.com/agent/vitoscarnecchia If you are moving ANYWHERE in the world - Let me know! I know a LOT of AMAZING Agents! Book appointments here: https://calendly.com/abitano/15min Home Buyers Course YT YouTube.com/SanJoseLiving IG https://www.instagram.com/abitanogroup/ FB https://www.facebook.com/vito.scarnecchia/ LI https://www.linkedin.com/in/vito-scarnecchia/ Blog http://blog.abitano.com/ POD https://spotifyanchor-web.app.link/e/oxdH1Hwfcvb Professional Photography by Kim E https://photosbykime.com / Local Real Estate Market and Home Value Report https://hmbt.co/bT7qRJ Financial Intelligence https://docs.google.com/forms/d/e/1FAIpQLSc0R5pjHIAPguZ5GDEB-fTbGJXKpWK3coK9Khymv_GTWkMnyQ/viewform?usp=send_form https://www.onereal.com/vito-scarnecchia-1 Willow Glen's five most expensive homes https://youtu.be/3A_E2ck0ePg
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