Rick worked for over 35 years in the brokerage business prior to joining Team Faby Luxury Realtors.

Market Commentary by Rick Faby, Team Faby Luxury Realtors

We are in a transitionary time, where the norms are vastly different from a decade ago. Real Estate has been in an upward trend since 2009. Will this continue? I think so, in specified markets. There is a trend away from cities, crime, high taxes, cold weather and crowds to paradise, safety, warm weather and freedom. Thus, the influx of buyers into Florida. With retirement, plentiful jobs, family focus and strong educational opportunities, Florida has become a desirable place to be over the past several years. Collier county is building its ninth high school this year. The average age is declining (-10 years) and we are surrounded by residents that WANT TO LIVE HERE. Life is better and living outside year round is desirable. This trend will continue for many years to come. Despite the low inventory, more properties are changing hands than ever before. We just set a record for listings in the month of January. There is plenty to buy. Buyers just need to be quick in decision-making with cash or a pre-qualification approval.

We are in a very strong period of inflation. This benefits the price of hard commodities and real estate. It does not benefit assets such as equities or bonds. CPI could increase by double digits, due to the vast governmental spending and the injection of the FED into our markets. So, diversification out of the markets into real estate to live in or to rent, would be a valid strategy. Rents are at an all-time high and there is no end in sight, so rental properties have very strong cash flow.

While interest rates have increased, they are still near the all-time lows going back to 1982. Holding bonds in a rising interest rate environment is not recommended. We expect the fed to have 4-6 rate increases this year. However, borrowing money at 3.35 percent for 30 years to lock in low rates, is an excellent idea. When I bought my third home, in 1982, mortgage rates were 17.85 percent. Now that is high! Rates today under 6 are low, very low.

We have had a bull market in equities since August of 1982, where the Dow Industrial Average was at 776, yes 776. Three-month interest rates were 22% and 30 year Government bonds, over 17%. These items were raging buys. Now the appeal and the luster has faded. Diversification into hard assets such as real estate, silver, timber (grows 4% a year) etc. may be the best performing assets for the next 20 years. If you must stay in equities, value stocks are undervalued and may outperform the high P/E growth stocks in the future.

The next 6 months are intriguing to say the least. It will be fun to witness the changes that take place. If you are well positioned, your portfolio and your heirs will be the beneficiaries of a sound investment strategy. We are happy to help!