The State of Things
On the home front, governance, war, inflation and rate hikes are some of the most talked about topics right now. Not cheery topics I know, but relevant to what we do and how we do it.
Since 1950, the S&P 500 has historically declined in September 55% of the time and the last two weeks of September 2023 have lived up to the reputation as typically being the worst of the year.
The impact of higher short-term interest rates is being felt; homebuyers saw the average 30-year fixed rate reach a 23-year high. It is speculated that the Fed is most likely nearing end of aggressive rate hikes.
Here in the 4th Quarter, historically, the S&P 500 performs the best during this time (mainly Nov and Dec) however, the stressors of the U.S. having no speaker of the House of Representatives and the ongoing Ukraine War and now the most recent lsrael-Hamas conflict, stock watchers sit with baited breath to see how the markets will react. Prognosticators wonder aloud if the market will take geopolitical events in stride. As is customary, everyone wonders if oil prices will be impacted if conflict spreads in the Middle East. When combined with the fact that the U.S. needs to stop an impending government shut down in only a few weeks with no clear leader for the speaker job in sight, multiple variables continue to be at play affecting market vibes. Consumer confidence has taken some serious blows.
To say that things are a mess at home and abroad is an understatement. There are not enough houses on the market for sale. There are people in need of homes who cannot get into one and not enough apartments that people can afford. There are senior citizens living in paid off homes where they cannot afford the taxes. They have enough equity that they could sell and go into smaller houses but again-there are not enough smaller affordable houses for sale or even apartments to go to. There are young families having more children and needing larger houses and yards who are staying put in little starter homes waiting to see if things change for the better. There are apartment dwellers waiting for the conditions to improve before they join the fray.
On the Commercial and Industrial side of things there is a shortage of affordable Class B industrial space. Good Class B space generally means practical, not all that fancy, but solid, functional storage or manufacturing space with the required amenities of power and docks in a decent location. This asset was typically always plentiful in the Lancaster market. Class B space is used as both long-term dedicated operational space and as transition space for companies expanding or solving evolving growth issues. Conversely, there is an absolute glut of office space seemingly everywhere in the county, and in the rest of the country for that matter. There are people looking for good Class B space that are settling for whatever they can find which is not ideal at all. Others are stuck improvising and having their business growth limited and restricted because they cannot grow. Additionally there are people who would love to convert their now obsolete office space to some other functional purpose who cannot do it for reasons of zoning or construction or the higher cost of money.
What is the Realtor to do? Keep trying. Keep reaching out. Soldier on, speak out, and rise above the fray to serve. These are the times that separate the wheat from the chaff. Old timers will tell you stories of when interest rates were 17% and they struggled to make their car payment. Also, please note that same car was what they used to transport their buyers around to see houses in those days- so it was a really BIG deal. Remember that if they made it through that and are still around today they have insight to share. Ask them about it! Urge your frozen clients to use this time to get their homes ready, build their credit scores and save while they wait. Be a tool in their toolbox for when they are ready. Stay in touch and stay relevant. Get creative, find a niche. Do not commiserate. Instead, inspire and help your clients to overcome their resistance to move forward in a world that is seeing people hunker down and do nothing.
This industry is not for everyone. It has survived countless wars, stock market crashes, natural and terrorist disasters, interest rate fluctuations, elections and even a pandemic ... and it will see more. However, if you want to become an old timer someday, put in the effort now so that you too can tell stories, years from now, about how awful it was and what you did to survive it and how you made it work for you- and for your clients. Above all, remember that this too will change. It always does. Change is the one thing about which you can rely.
Althea
October 18, 2023
Facts, opinions and information expressed in the Blog represent the work of the author and are believed to be accurate, but are not guaranteed. The Lancaster County Association of Realtors is not liable for any potential errors, omissions or outdated information. If errors are noted within a post, please notify the Association. Posts represent the author's opinion and are not necessarily the opinion of the Association.
