Ahh, springtime. Longer days, warmer temps, flowers abloom, the crack of the bat on MLB’s opening day, the NCAA Final Four, and the Masters golf tournament.
You may be wondering how I have time to make any deals with all the sports happening this time of year. It’s tough. But in light of the screen time I’m spending, my thoughts these days are random.
Please stay tuned as I run through a few thoughts I have clouding my consciousness. Someone famous once said, “They’re only opinions, but they’re all mine.”
Seller/buyer disconnect
Not terribly long ago, we were immersed in a seller’s market. Occupant demand outstripped supply and sellers were bullish.
Multiple offers were the norm. Asking prices were abandoned for the dreaded TBD in case pricing was pegged too low and money was left on the table.
The amount of buyer activity determined the ultimate strike price. In order to compete in this frenzy, occupants were forced to shorten due diligence periods, jettison financing contingencies, and seemingly overpay. A listing translated into a guaranteed paycheck.
My how the world has changed in two short years. The only thing keeping sales prices relatively stable is a lack of availabilities.
The presidential election
I get asked quite often what to expect if Donald Trump is elected vs. President Joe Biden. Generally, a Republican administration can portend tax cuts, an increase in defense spending, loosening of government regulations and the appurtenant boom in the economy. To the extent this boom causes prices to rise, interest rates must be hiked in order to cool the fever.
Counter to this would be a Democratic administration with higher taxes, cuts in defense, more regulation and a weakening economy.
Yes. I’m oversimplifying. I can hear the detractors screaming thar we have a Democrat in office and the economy is just fine. In our most recent republican tenure, government debt increased dramatically. So the above are only generalities.
Bottom line. Who knows?
What’s happening now
Speaking of said economy, what’s up? Consumer confidence is high, over 300,000 jobs were added in March, labor participation rate is now close to two thirds. Why are employers adding so many jobs?
Granted, a big portion of the new employment is in the service industry where folks are spending money to dine out, take trips and buy experiences.
Meanwhile, we expected a declining interest rate market this year as we anticipated the Federal Reserve would start the march down with inflation coming to heel.
As of this writing, our benchmark 10-year treasuries are topping 4.4%, which is bad for borrowers, good for savers. Retailers in the beauty trade are taking their lumps as well.
Bottom line. Who knows.
Springtime spells new beginnings. Another year and another batch of things to ponder. Should be an eventful balance of 2024.
Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104.
Source: Orange County Register
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