Existing home sales fell another 2.4% in March. This is the 13th time in the past 14 months that this metric has gone down.
March normally kicks off the spring selling season. Given the increases in interest rates, it looks like the Fed’s actions are having their desired effect.
The market slowdown is also beginning to reduce home prices. The last two months have seen the first pricing decreases on existing home sales we’ve had in the past 11 years.
The commercial markets are much more difficult to judge given their lack of comps. But I’m already hearing from my developer clients that the prices on the projects they’ve been considering are already coming down.
By definition, these prices would need to lead the market, given a developer’s need for financing. Let’s remember that at the end of the day there’s a finite amount of profit in any development deal, and even the bank needs to get paid.
We do an enormous amount of work in this arena. Every major developer we serve sold off most of their problems a couple of years ago, not even thinking about doing Starker Exchanges.
They did this knowing these lower prices were coming. Please also realize that this is just getting started.
These prices haven’t begun to take into account the Amazon Effect where landlords can’t pay their mortgages because they can’t find decent retail tenants. The majority of the foreclosure actions are yet to begin.
If you’re looking to purchase real estate, patience might be a good idea.
In real estate you generally don’t make money when you buy high and sell low.
Let me leave you with this.
I had an interesting conversation yesterday with one of my long-term clients and very good friends. For our purposes today, I’ll call her “Gina”. Maybe it’s because I just finished another difficult tax season but we got into a conversation about retirement.
Her entrepreneurial journey hasn’t been an easy one. She began her first business when her last child entered college. In the past 25 years she has needed to reinvent her company and the services she provides at least three times.
In each maturation she was smart enough to learn from her mistakes and apply that new knowledge to the next version. She was also strong enough to not lose much when the prior businesses went down, and continued to save for her retirement.
Gina is now 72 years young and hasn’t needed to work for the past 10 years, so I asked her when she was planning to retire. Her response was inspiring.
“The day I don’t like it anymore and can’t help my clients live a better life will be the day I give it up.” She continued.
“When we closed the last business, I was heart-broken. Shutting my doors hurt my very soul, so I took three months off and was absolutely miserable. I just didn’t have a reason to get up in the morning and couldn’t stand the fact that I wasn’t helping anyone anymore. So I radically changed my business plan, got going again, and haven’t been unhappy since that very day.”
We forget that entrepreneuring isn’t just a job. For many, it’s our calling, our reason for being.
Many wake up thinking only about that one day in the future, when they don’t have to go to the office, and deal with the issues anymore. Others only worry about that one day in the future when they’ll be mentally or physically unable to go to the office and deal with the issues. If this is you, what will happen then?
One of the saddest things I’ve seen in the past 33 years of my journey is the entrepreneurs who die within a year of retirement. They spend the majority of their adult life, learning to manage men, money, material, and machinery.
Then one day, it all just stops.
Think about what that can do to that capable entrepreneur. One day they’re at the top of their game, the very best in their chosen field, a true industry leader. The next they’re flipping through the channels trying to find something to watch other than Days of our Lives.
And many don’t make it. I’ve had six or seven clients that didn’t even make it a full year into retirement.
Entrepreneurs are different. In many instances, the normal rules don’t apply. If you have what it takes to entrepreneur; if you have that drive, that ambition and the strength to persevere, then maybe you don’t have what it takes to spend the rest of your life volunteering at the charity of your choice.
I’m sharing this so you can realize that for many, there’s a different path. For many, the healthiest thing they could possibly do would be to get out of bed, go to work, and deal with the issues.
Think about it. If this is you, you’re not alone.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Employee Retention Credits, M&A Due Diligence, Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
888-310-0300
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