In The News Recently These Were The Headlines:

Do Jobless Claims Show Signs of a Cooling Labor Market? Are CRE Price Drops Coming? 'Moderate Bump' Expected For Cap Rates In Near Term. ‘Catastrophically Bad’ Inflation Report Is Boosting Chances Of A 75-Basis-Point Interest-Rate Hike Next Week, The US Will Tumble Into A Recession As Inflation Soars, 70% Of Top Economists Say.

And here’s some newscasts reporting on the economy.

Yes most of the news is bad.  I looked for good news on the economy and real etate market - but couldn't find much, if any. The federal government is dramatically — and intentionally — underreporting inflation. Let’s take a look at the Bureau of Labor Statistics Consumer Price Index.  

The party’s over for real estate sales. Just 3 weeks ago Orange County had 22 closed sales in 1 week. This past week Orange County had just 4 closed sales. Remember, these are transactions that went into escrow 30-45 days ago.

The Pulse of the Market  

We’re seeing more and more price reductions and properties coming back on the market after being under contract or pending. Buyers are backing out of deals. Afraid to buy with the market having hit its peak. Inventory levels are increasing also. The market is at the beginning of a shift to a more balanced market and buyers will soon have more leverage in the negotiations. When the market changes like it has currently, you need someone who does more than take a listing and put the property in the MLS and wait for offers to come in. You need someone who has experience and someone who will do their homework on the market and market conditions prior to you listing your property.

WHAT TO EXPECT
The market and economy are changing. I expect the Days on Market to slowly increase and bidding wars to subside.  I expect inventory levels to increase also. So far multifamily values haven’t been affected. But I expect that to change. No, I don’t see values falling like they did in 2008, but I do see a slow-down in appreciation. If we do see values fall, I would think it won’t be more than 10%. But there’s a lot of questions right now with interest rates, inflation and unemployment and how each one of those will affect values. It’s too early to tell if values will fall at all or just up to 10%.

Let me know what you think is going to happen. Post your comments at the bottom of this page.