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Here's What's Happening In The Market, Here’s What This Means For You

A great deal has been written about the impact of inflation and the Fed’s continued interest rate hikes on commercial real estate. The cost of capital is going up, meaning deals that made sense even six months ago don’t quite make as much sense now. Increasing land, labor and material costs, along with gas pump and energy sticker shock, are making it more difficult to construct and renovate. Let’s take a look at these charts to see what’s happening in the market and to get a better perspective of things. 

THE PULSE OF THE MARKET 
Last week there were further indications of a slowing market and increasing inventory. There were fewer listings with active listing status moving to under contract status and slightly fewer closed sales in some areas. Lenders are pulling back dramatically, but rates are still comparable from 90 days ago for the right asset. Lenders are also taking a more conservative viewpoint on valuations.

WHAT TO EXPECT
For listing inventory, I expect continued increasing inventory, continued price reductions, and slightly longer days on market. For closed sales, I expect fewer transactions selling at or above the asking price and more flexibility from sellers in negotiations. Buyers will have more strength in the negotiations.

Don’t forget to look at all the closed sales, weekly stats, and monthly charts in detail in the full report on my website. Mikelembeck.com. As always, feel free to give me a call or send me an email with any questions on the market. The way to increase your wealth is to sell at the current historically high prices and find alternative investments where you can get as high or more passive returns and continue to increase your wealth. Let me know if you’d like to have me analyze your situation and property to help determine your equity position for a potential sale or 1031 exchange.

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Mike Lembeck

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