Yield Curves, European Buyers, Commercial Growth

Latest Newsletter Volume 5 Number 19 - June 17, 2007
Yield Curves, European Buyers, Commercial Growth


The yield curve has been inverted since late 2004. (For a detailed explanation of yield curves CLICK HERE ) Simply put, an inverted yield curve means that most investors think the economy will be softer in the future. An inverted yield curve occurs when long-term yields fall below short-term yields. Under this abnormal and contradictory situation (that we have had here in the US for almost three years), long-term investors will settle for lower yields now if they think the economy will slow or even decline in the future. An inverted curve may indicate a worsening economic situation in the future. In addition to potentially signaling an economic decline, inverted yield curves also imply that the market believes inflation will remain low. This is because, even if there is a recession, a low bond yield will still be offset by low inflation. However, technical factors, such as a flight to quality or global economic or currency situations, may cause an increase in demand for bonds on the long end of the yield curve, causing long-term rates to fall. ( Current yields here )
“Okay, Gregg, now that the yield curve is no longer inverted, what does that mean to me?” It means that the economy has turned. Money will get more expensive, inflation will return, and most importantly, A SENSE OF URGENCY WILL RETURN TO THE REAL ESTATE MARKET.
To me, a return to a more traditional yield curve is great news for those of us in the real estate business that are accustomed to appreciation (remember that?) It is just one more sign that the market has reached bottom and is getting ready for a return – not to the high flying days, but to normalcy. Buyers will want to buy now – before interest rates rise and prices rise. Pretty simple.
This past week I closed the deal to buy a franchise for Engel and Voelkers and will soon open a residential real estate office on Hendry Street in downtown Fort Myers .
Engel and V ö elkers is one of the largest European based international residential real estate agencies. Their headquarters is in Hamburg Germany . We will be one of the first ten locations in the United States .
Folks, I can't guarantee you that we will be able to bring European buyers here to the United States just because of Engle and Vöelkers, but I can guarantee you that if you don't market internationally in this “Flat World” we live in, you will not get those buyers. Over the past year I have been examining alternative ways to structure the residential part of our business. I believe I have found a solution that will help us and our customers reach out globally and give us a blue print for growth. Right now twenty per cent of the second homes in Florida are sold to foreigners, the Euro and the Pound AND the Canadian currencies are very strong versus the dollar. If there was ever a time to market globally, it is now. Every property we list will get that listing translated into German and Spanish and be posted on E and V global website and promoted in local offices throughout the world. Next month Gail and I leave for Europe to visit brokers and real estate offices to help establish “bridges” to Europe for our properties here in Fort Myers . I also will be adding German and Spanish bilingual agents to the down town office. The transition will take a few months, so stay tuned.
Market America Real Estate and Investments, LLC continues to grow as well. Moving the residential business to downtown will give us more focus commercially and give us additional room for growth. We have just added another CCIM candidate, Cheryl Peppers , to our staff. Along with serving her existing client base and managing an impressive real estate portfolio, Cheryl will concentrate on expanding our Hospitality sector. She brings with her years of financial and institutional consulting experience. Cheryl will also be instrumental in more of our fee based research business so we can capitalize on her analytical and research background for our clients.
Market America Realty and Investments now has a number of hotel sites and a large number of restaurant and bank locations. We are handling the lease out on two shopping centers and are expanding our retail leasing operation under the guidance of Stephen Luta.
The restaurant business is aptly handled by Ron Campbell . Ron has been in the restaurant business for over ten years now and is doing site selection as well as the marketing of our six restaurant sites. Ron consults with a number of investment groups and places their funds into growth and income real estate.
Our office sector continues to grow as well. Eric Lahaie specializes in office sales and leasing and has done a remarkable job with our office projects in Lee County like Brantley, Metro Park , and College Parkway .
Cliff Wiersma is our most experienced CCIM with over twenty years of knowledge in the local market alone. Cliff handles many of our land deals and income property opportunities. Our own in house mentor, Cliff has guided many an investor to the property properties.
All of us emphasize long term relationships and objective based service. After all, we are in the real estate CUSTOMER business, not the real estate AGENT business.
Until next week,
If you have missed past emails you can search here: ARCHIVES
Gregg Fous
Gregg@ma-realty.com
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