Monday, December 5, 2016

The Crystal Ball is Hard to Read

If we all knew what was going to happen in the economy before it happened, we'd all be very wealthy.  As it is, people are wondering what will happen in the Trump Era.  For real estate, it should be a good thing, since he is, after all, a real estate developer himself.  We know that he's planning to cut taxes in certain ways, and he hopes to speed up the construction of infrastructure.  Against that, there is the possibility that he will eliminate or cut down the interest deduction for mortgages, or that his social policies will affect places like New Haven, which is a sanctuary city. On the whole, however, we should see some benefits for those who own and invest in real estate.

The stock market has already weighed in.  After an initial downturn, it went zooming back up, and clearly is behaving as though Trump will be good for business.  If so, real estate should have begun rising.  We can't tell what's under contract, but the lag time for closings in the commercial sector, and the length of time that a transaction takes, means that we haven't seen anything yet.   But we probably will.

Assuming that's true, the race will go to the swift.  Those that buy near the beginning of the rise will profit the most.  So, what are you waiting for?

Wednesday, November 23, 2016

Under All This Land

I taught the Ethics course required by the National Association of Realtors this week to commercial Realtors from around the state.  The Code of Ethics has been around since 1913, and we go over it in continuing education throughout our careers.  It's always a good reminder, although the application of  the Golden Rule would be enough to cover most situations.   I was reminded that the Code begins by saying "Under all is the land", and that underscores the fact that what Realtors do goes to the heart of the American dream and way of life.

Wherever you live, and wherever you work, play, pray, and shop, you are in buildings and homes that are built on the land that makes up our country.  Realtors and real estate are integral parts of putting families and businesses in homes and commercial spaces, which is an important why we do what we do.

 And it's one of the things we're grateful for this Thanksgiving, and every day--our clients and their trust in us. We are happy if we have been a part of locating your holiday table in its current location!  May your Thanksgiving be full of peace and joy, with thanks and best wishes from all of us at Pearce Real Estate.

Tuesday, October 25, 2016

Election Pause?

Many real estate professionals claim that there is always a hiccup in the market before an election, as people try to figure out what will happen in either scenario. It's not clear to me that it's happening this time, although you couldn't have a starker contrast between two candidates than we are being presented with this time!

One thing that is clear is that interest rates are never lower than before an election, especially in a presidential election year.  This time is certainly no exception, and that should spur action under any vision of the future.  Over the long run, it matters more what your interest rate is than what you pay for the property, within a certain range. 

Besides, how do we even know which candidate Wall Street will favor?  Hillary has most of their contributions, and Trump is a businessman, like most of those running big companies.  Either one should have their fair share of support, meaning that the stock market should not react wildly to either outcome. 

Well, here's one time when I'm clearly on the line, since we only have two weeks to go, before we find out what happens.  In the meantime, go forth and buy or sell--you should be fine, in any event!

Tuesday, October 11, 2016

The Irish Experience

We just got back from a quick trip on the new flight from Bradley to Ireland, and it was a terrific experience, but also instructional.  Dublin is a city that, in some ways, would remind people of New Haven, but with more redheads.  There are lots of students everywhere, a shortage of rental housing, a big university right in the center, new tech companies starting up, and more restaurants than you could ever believe would be needed (and mostly all full).  Plus lots of beer--recently often craft beer.  Also like New Haven, there has been little commercial building over the past ten years, while the economy lagged.

What's different about Dublin from New Haven?  Well, it's a capital city, with all the economic power that that brings.  It has a major airport, with easy, and cheap, access to many parts of the world.  It's part of the EEU, and next to Britain, which just voted to leave that organization.  It has great public bus transportation with the city and around the country, in addition to rail. It has lots and lots of tourists.  And it attracts industry from other countries, including European headquarters of global firms.

Can we learn anything from their experiences?  After all, they've had a rough ten years as well, and many types of property have declined in value.  It's also much harder to get financing there, and lots of people can't get it.  However, if we work on job growth, transportation infrastructure, and attracting new industry, maybe the people (even the redheads) will come.

Thursday, September 29, 2016

The Multifamily Category is Still Hot

When I look at the LoopNet list of the most-often viewed properties in Connecticut each week, I am struck by how many are multifamily properties  (and also about how few are ever industrial, where there is a big supply).  Week after week, thousands of people view residential investment rental properties.  Why the appeal, and why is it not waning?

I think that the appeal is like all of real estate--a tangible investment in a time of uncertain returns in many investment categories.  It also is the type of investment where those who are handy, or have some free time, can improve properties or cut expenses, and raise returns, something that cannot be done with stocks and bonds.

But won't the supply exceed the demand?  People don't think so, and that's coming from two ends of the age spectrum--millennials and seniors.  Millennials, with little desire for home chores or fixed commitments, and with a lot of educational debt, are renting in bigger numbers and for longer.  And downsizing older adults are no longer finding a stigma in rentals, so they are often selling big homes and renting in urban areas especially.  Since Connecticut has a very high average age, we have a lot of those people.  Also, professionals who move here to take jobs are renting much more often.  They are renting more everywhere, for the reasons above, but our state has a very high percentage of people who want to avoid what they see as an illiquid investment--an owned house--and high estate taxes, so they consider buying somewhere else, or keeping the house they had elsewhere, and renting here.

Will this continue?  It seems to be holding up for the present, even in New Haven, which has loads of new product coming on line.  It may well be that, at some point, those who are slumlords, or who have not reinvested in their properties, will be forced to lower rents or make improvements, in order to compete with the newer buildings, but even that hasn't quite happened yet.  So the interest in the segment continues.