As September comes to an end, we are all being confronted with new realities around inflation, sharply higher interest rates and other big changes.
- the FED will continue its policy of higher rates as the data they see is badly delayed. They were slow to raise rates for the same reason. They will be slow to see the full impact of these higher rates.
- Buyers will be obsessed with "what if" mentality: if they wait, will prices come down further? Smarter buyers will rather use this moment of uncertainty to negotiate thereby having the opportunity to focus on quality, not just price. There is one thing worse than buying a bargain: owning one!
- Sellers will adjust their expectations and lick their wounds by not having sold at a premium when they could have. They will still do very well, but will have to be far more patient. Many will offset 'losses' if they are buying something else. Sellers educated with real time, curated, specific data from a professional agent will adjust to reality quicker.
- Inventory levels will increase, but there will still be shortages of certain classifications. Reduced construction combined with under-building, trillion dollar infrastructure building, repairs and replacement construction are almost certain to make replacement costs continue to rise.
- I think we will see some DEflation. Rents may scale back in areas. The threat of recession globally is pushing down the prices on LOTS. Energy may be the outlier. The sales at retail will be INSANE! (PS: Even Bergdorfs and Neiman Marcus are discounting already....in September!)
Investors are waiting for ONE KEY MOMENT: the day the FED says its pausing interest rate hikes or ceasing them. At that moment I see a surge in all markets.....including real estate markets. Markets like some clarity. That day is coming.