In the Know
Navigating the Market: A Tale of Two Worlds
Good Day,
The ebbs and flows of Wall Street often mirror those of the real estate markets. Currently, we're witnessing a fascinating dynamic where some properties are flying off the shelves with hefty price tags, while others are experiencing sluggish sales and price reductions. What's behind this disparity?
It's a story of market adjustments. Many assets have seen significant price increases, prompting a natural rebalancing over time. Amidst this, one of the most significant shifts in recent weeks has been the changing predictions regarding Federal Reserve interest rate cuts. Previously, there was widespread anticipation of multiple cuts, but now the consensus has shifted to just one or two cuts, if any at all. This sudden change has left many investors and buyers feeling uncertain, leading to a noticeable lack of urgency in the market.
Initially, the prospect of rate cuts instilled confidence that home prices would remain stable or even continue to rise. However, with the likelihood of rates staying the same or increasing, concerns have emerged about potential home price declines as buyers try to offset higher rates with lower purchase prices. The low inventory has somewhat mitigated this effect, but signs of change are emerging, particularly in areas where demand has softened or new construction has increased supply.
In the broader economy, we're witnessing a tale of two markets: those with hard assets like real estate and stocks have seen substantial gains, with the DOW up 35% since January 2020 and the S&P 500 up 58%. However, inflation has impacted those without such assets, highlighting the stark divide between the haves and have-nots.
Despite these fluctuations, it's essential to remember that market cycles are part of the natural order. This too shall pass, and as we navigate through these changes, we can anticipate new opportunities and strategies to emerge.
Wishing you a fantastic weekend ahead!
Alexander
P.S.
DID YOU KNOW? Almost everyone these days advertises or markets via GOOGLE.....a cost to most businesses......their profits quadrupled in the last quarter.....Youtube sales jumped 20%....all these costs are passed on to the consumer...... Meta reported 27% growth and Snap 21%...... yesterday, Wall Street cheered these exceptional results .....today you'll probably hear them complain that inflation is rising...
DID YOU KNOW? From January 2020 through the end of March 2023, more than 370 investment companies (about 2.5% of the US total, and managing $2.7 trillion in assets) moved their headquarters to a new state. The vast majority of the migration was out of high-cost-of-living locales in the Northeast and on the West Coast and into Florida, Texas, North Carolina and Tennessee and other warmer-weather, lower-tax areas. All of this moving has fueled high inflation in these areas with the movers used to paying higher prices, driving up the costs for 'locals'....and having more disposable income to spend on other things besides housing. (Bloomberg)
DID YOU KNOW? Are RETRO kitchens from the 1950's making a comeback with brighter colors and a more whimsical approach? Some designers think so.... (Mansion Global)
DID YOU KNOW? Did much higher interest rates help or hurt the fight against inflation? According to Nobel Prize-winning economist Joseph Stiglitz, the FED did not get to the core issue fueling inflation: The massive global supply side disruption. That may have been better served with time rather than too-high rates. He believes rates were artificially low and needed to be raised for sure, but believes they went too far, too fast, too late....and that the sharp rise in rates actually fueled inflation and made it worse. He also believes as we go through massive global transitions, wars, etc, having a slightly higher inflation target - around 3% - makes sense if it keeps employment strong. (CNBC)
DID YOU KNOW? In the decade to 2020, the population grew by around 7.4%, the weakest decade of growth since the Great Depression. The population is expected to settle at a growth rate of only 1 million per year by the end of this decade. For context, the average population growth rate in the 1990s was over 3 million people per year. This is just a taste of what’s to come. By the 2050s, the Census Bureau forecasts the population inching higher by a mere 350k per year, not far off where it fell to during the depths of the pandemic.)
“We’re in pretty good shape and so far it looks like that soft-landing type of scenario. But put me on the cautious side of that one.”
DID YOU KNOW? A high-speed rail system with trains reaching speeds of up to 200mph - similar to the one in Florida connecting Miami to Orlando - will connect Southern California to Las Vegas by 2028.
DID YOU KNOW? 46.8% of luxury homes that were bought during the three months ending Feb. 29 were paid for in cash, the highest percentage in at least 10 years and a 44.1% increase from 2023. (Barrons)
DID YOU KNOW? The 10-year Treasury is up almost 22% since its low in December 2023.
DID YOU KNOW? A Smart City index produced by the IMD World Competitiveness Center’s Smart City Observatory in collaboration with the World Smart Sustainable Cities Organization (WeGO) based in Seoul, South Korea ranks 142 smart cities worldwide based on data analyzed by researchers and survey responses of 120 residents in each city capturing an overview of how the infrastructure and technology available in a city impacts the city’s performance and quality of life of its inhabitants. The Top 10 were: Zurich, Oslo, Canberra, Geneva, Singapore, Copenhagen, Lausanne, London, Helsinki and Abu Dhabi. (CNBC)
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4 Bed | 3.5 Bath | $9,995,000
Amazing Opportunity to Own this brand-new masterpiece Turnkey Furnished —a sanctuary of sophistication nestled in gated ONE Las Palmas, the best location in the heart of Palm Springs. Curvilinear Design, the architecture itself is a work of art—a testament to modern aesthetics. Enormous Great Room with ceilings soaring beyond 13 feet, and entire multi-slide wall creating seamless harmony from indoors and out. Every detail, from the custom furnishings and lighting to the carefully curated art, speaks of refined taste. Full Net $0 Solar including batteries and even pool heating.
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The Luxury Division
Recreation Properties
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Architecture + Design
130 Monarch Bay Dr, Dana Point, CA 92629
Representing the pinnacle of custom contemporary architecture on the Southern California coast, this magnificent single-level estate combines ocean views, vast interiors, and private outdoor spaces. Settled on a premier seaside lane in Dana Point’s guard-gated Monarch Bay neighborhood, the vast modern masterpiece overlooks sweeping Pacific Ocean and whitewater views that are highlighted by evening lights and gorgeous sunsets. Residents of Monarch Bay enjoy a private clubhouse with beachfront dining, beach attendants, volleyball, pickleball and tennis. Laguna Beach, five-star resorts, Dana Point Harbor and miles of beaches and coves are merely moments from your private paradise.
See you next time.
Broker Associate at COMPASS Naples
Serving Naples, Miami, Sarasota, Atlanta, New York, San Francisco, Los Angeles, Chicago
