Real Estate News

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The commercial real estate market in South Florida has been degrading for quite some time. Last year, I predicted in a number of my previous Posts on Linkedin.com that this trend would start in 2017, and I also stated why I thought that very brisk and healthy market of last year was due for a slow down. Summarized here, we can point to the following factors for our current slowdown: rising interest rates, originating from a more motivated and aggressive Federal Reserve, a strong dollar, and a series of long term price appreciations of most properties here in South Florida since the last downturn in 2008. These were my main reasons for my previous prediction that our market was moving towards a top. Now, it is time to discuss what is likely to happen to the market in South Florida in the next year. We can begin our discussion by taking specific note of the current conditions in a number of sub markets within our overall commercial real estate market.

A Number of Sub Markets are topping:

While the inventory of good quality industrial, office, and multi family properties...

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South Florida is currently in the mist of one of its best winter seasons in many years. The weather has been beautiful with some cool nights and warm days, and visitors from all over the world have been enjoying our beaches and golf courses. Our roads and streets are busy with lots of traffic, and our restaurants appear to be full with snow bird diners. Many of our finest attractions are busy with all kinds of visitors, from children to Seniors, lots of folks are spending freely.

While all of this winter seasonal activity is normal for us for this time of the year, the real estate market is in the process of changing. The Realtor's Association of the Palm Beaches has just published its regular market update, and deep inside the data the message for most analysts is troubling. After many years of being in a seller's market, where inventory was too low, and sellers were generally in control of pricing, the residential real estate market in South Florida appears to be moving into new territory. For a number of reasons, buyers are slowly becoming scarce, while inventories of...

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You hear and see it everywhere, "A crash in the stock market is coming! Market mavens prepare for huge fall!"

Don't believe it. A crash in both the US stock market, and in American real estate, is not going to happen. Here are the reasons why.

Let's start with what is really happening in the world economy.

The so called "crash" theorists insist that the Federal Reserve is soon going to raise interest rates to where historically they have been in the past. Their thinking is that sooner or later, the Fed has to return to normal interests rates, and when that happens, all of the values in the current real estate and US stock market will be affected so negatively that a crash will occur.

But interest rates are NOT going to return to normal levels anytime soon, and here is why: a new economic phenomenon in almost all of the the World's economies is slowing taking hold. That new phenomenon is what I call, "competitive deflation." I am sure that you have never heard of this two terms before, and the reason that you haven't heard of them is because no one is...

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Investors in South Florida with US dollars in hand have an interesting opportunity in the commercial real estate market right now. If you are one of those folks, get your money ready.

With the US elections only three months away, international buyers are both nervous and unsure as to how to proceed with their ongoing investment in American real estate, and Florida is one of their favorite places to send their international country's currency. While the political atmosphere in the US remains charged with anger, accusations of incompetence, and political intrigue, investors inside the US have a fantastic opportunity to make money. Here's why.

Since international money is currently uncertain regarding how things will go in the election, and, added to that problem, their currencies are worth significantly less in US dollars than two years ago, US investors with a willingness to take a risk, have an opportunity to buy commercial real estate now at good prices, and wait for the election to come and pass. After the Presidential winner is chosen, the world's investors will...

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Suppose you own an 8,000 square foot retail store, which includes your own building in downtown area of one of the 29 Palm Beach County cities in Florida. The property is in great condition, and currently zoned for general commercial use. The City where your store is located has issued to your company a business license for the retail use of your property over and over again for many, many years.

All of a sudden, you begin to see a disturbing change in your business. You notice that fewer and fewer customers are coming into your store, and when you begin asking some of the individuals, coming in less and less, why they are not patronizing your store anymore, the honest ones sheepishly tell you that they have found the same items in your store at a cheaper price online. They also tell you that they have found online shopping much more convenient. To purchase some of the same inventory items you have in your store, they tell you that they do not have to get into their car, and they don't have to drive to your store's location. Everything they order online is a simple click,...

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Everyone knows that news affects all kinds of economic markets. So no one should be surprised by the recent news that retail properties are coming under pressure. The cause of concern is the rise of many online retail sellers like Amazon, Overstock.com, and a host of others.

If you haven't been watching the US stock market in the last month or so, then you don't know that retail stocks on the NYSE and NASDAQ have suffered sharp declines in recent weeks. This has been especially the case for older retail brick and mortar companies, as earnings and sales at many retail businesses locations across the land have suffered dramatic downturns. Commentators, both on TV and in the economic news, have heaped on the growing stock price carnage with ominous statements like,"The end of the brick and mortar retail era is upon us," and "Online retail has now increased to a point that traditional retail has finally started to suffer significant market share losses." While most of these statements are factual, the major impact of these and other news reports has been to cause national stock...

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Residential real estate brokers from all across Palm Beach County are reporting to me that their sales are either slowing, or taking longer to close. It's the pause that refreshes!

Since 2010, our market has been on a constant upward spiral of price increases, with inventories slowly winding down to normal levels. Just as I predicted late last year, we are beginning to see a residential housing slow down. While inventories of residential homes have recently increased slightly, the number of eligible buyers has diminished. Why?

First, home prices have risen to levels almost equal to the high point of the price increases in the last real estate cycle. This was the cycle that started in 2001 crested in 2006 and ended with the stock market crash in 2008. Current affordability has declined, and as a result, fewer buyers are in the market, shopping for a home.

Second, the US dollar has risen to new highs in the world currency markets over the last year and a half, so much so that buyers from international destinations have come to realize that they can no longer...

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In my last few Linkedin Posts, I have described how Nikolai Kondratiev, a Russian economist, who died in 1938, studied commodity markets in Europe from the Seventeenth Century to the early Twentieth Century. Based upon his extensive research, Kondratiev developed a theory of what he called economic market waves, or cycles. In order to explain these recurring patterns of price changes and crop production rates in any given set of commodity markets over a three hundred year period, Kondratiev developed a thesis that all commodity markets contain within their ongoing market transactions a repetitive pattern of price and production correlations. Kondratiev further refined his research by delineating a set of characteristic patterns within any given market. Kondratiev believed that each market contained five repeating patterns.

Each of these five "waves," as Kondratiev liked to call them, corresponded to a period of time within a market in which the price of a commodity passed through a dramatic series of price changes, and those changes could be correlated to corresponding...

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If you believe in the Long Wave Theory of Nikolai Kondratiev, whose economic theories I have discussed in my last two Posts, what are the chances of another deflationary depression coming upon the world in the next few years?

We can address this issue by first noting the chart published above. It is a graph showing the meanderings of the US Dow Jones Average ever since the crash of 1929. The blue sections of the chart show the Bull market moves, while the red indicates Bear markets. As you can see quite clearly, except for the period after 1929, when the Federal Reserve was slow to respond to recessionary signals by failing to ease monetary policy, the actual period of survival for an average Bear market has been very short. This is mostly the case because the Fed actually learned its lesson after the Great Depression. Generally speaking, after the Great Depression ended in 1945, interest rates were lowered quickly, especially whenever the Fed realized that the economy in America was in some kind of real trouble, and correspondingly, the economy responded to the Fed's...

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In my last Post, I described the true story of Nikolai Kondratiev. Kondratiev was a Russian and Soviet chief who studied historical agricultural data from Europe over a three hundred year period, and from that data, he developed the theory that all agricultural markets in Europe were constantly subject to repeatable, inevitable price and production patterns. Kondratiev called these data patterns waves. His historical research showed an amazing correlation between the rise and fall of market prices and the production of a commodity in any given market. Kondratiev found that each commodity market he studied contained within itself a repetitive five wave structure, culminating in a final two wave period of collapse of prices. Kondratiev's research also showed that there was great evidence for what he called, "A Long Wave." This so called Long Wave was an overarching, all encompassing pattern of behavior in which all sub markets could be found to be repeating their five waves of regular action on a constant basis. Kondratiev also determined that over a three hundred year period, a...

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Politics and economics have always been deeply connected to one another in any given period of world history. The current world political situation is no exception. The poor condition of the present world economy has sparked numerous manifestations of political stress. Central Banks of governments all around the world are pumping money as fast as they can into their economies in order to stem the tide of deflation, sweeping over the political and economic landscape. War, and the dislocation of whole populations in the Near East, has added to the fear and suffering. Everywhere one looks, one hears the cries of doom and gloom. And what do our political and economic leaders seem to be doing to stem this tide of negativity? Nothing, because they simply do not know what to do.

It might not be of any comfort to anyone reading this Linkedin Post, but the fact of the matter is that the seriousness of what we are presently going through in world history has been predicted and classified long ago as simply a normal cycle of economics. This was clarified long ago by an obscure Russian...

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