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Happy Tuesday! This is The Real Deal. The email that tells you the latest that's going on with Real Estate in plain jane english.
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In Today's Email:
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Jerome Powell, Chairman of the Federal Reserve, just announced a 0.5 percent increase in interest rates just this last week.
This marks the largest single raise since 2000.
Lame.
Besides us being here for moral support every time the Fed raises interest rates...
What do we do think about it?
Team Kekoa's Take: Our deal volume has shrunk by around 25% with all the rate hike increases. The good news is that a 10% COC deal today is really a 12%+ COC deal 6 months ago. The only thing that matters is that the property cashflows and the ability to hold long-term for a sweet refinance.
The Federal Reserves interest rates within the past decade
Despite prices being crazy high and the world being on the brink of a recession...
Mortgage delinquencies are low... like super low.
Here's the scoop from Black Knight:
#1 The delinquency rate is the lowest it's ever been: The national delinquency rate dropped by more than half a percentage point in March, falling to 2.84% and shattering the previous record low of 3.22% in January 2020
#2 Employment, loan deferrals, and forbearance are to thank: Robust employment, continued student loan deferrals, strong post-forbearance performance, and millions of refinances into record-low interest rates have all helped put downward pressure on delinquency rates
Why's this matter?
Mortgage delinquencies are a great indicator of a market correction in the making.
It's what allowed people to make a killing back in 2008.
Queue The Big Short...
The "oh s&@#" moment in The Big Short
IRR recently released their 2022 outlook report (a bit late, yeah?) and it's a great read.
The one thing I like about IRR is their take on market cycles.
As you might know, the entire country doesn't move in the same market cycle.
Some are amidst expansion while others are in the middle of a recession and everything in between.
The cool thing is there are always the same four parts to a market cycle:
1. Expansion
2. Hyper supply
3. Recession
4. Recovery
Targeting the markets that are in or gearing up for expansion has always been a part of the TK playbook (shhh).
Here's what they said for the multifamily:
All of the markets we're in are gearing up or are already in the expansion phase
We're your partner for sourcing, analyzing, and negotiating long/short term rentals. Go to www.TeamKekoa.com to get started today.
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