NOV NIBJ: Looking at things sunny side up

I often wonder about the negative news bias I see in the media I consume. 

I get a curated newsfeed from reliable sources on my laptop, but I have no idea what the algorithms believe I should get.  I seldom watch the news on television, but occasionally I will catch the BBC or PBS, trying to avoid the extremes of the left and the right cable news talking puppets. I read The Daily Bee for local information, and the Wall Street Journal for its coverage of the economy.  

There is obviously a lot of bad news out there, but I wonder if there is an equal amount of good news that I’m just not seeing. To some extent our brains are wired for survival, and the ability to focus on threats helps ensure that survival. Our caveman ancestors had to pay more attention to saber tooth tigers than beautiful prehistoric butterflies.

On a wonderful Friday afternoon in mid-October here in Sandpoint, the colors of the trees are brilliant, the sky is bluebird, and I can bike the Pine Street Woods in a T-shirt. This is the fall shoulder season, and everything has slowed down from the intensity of summer. It’s the perfect set of conditions to find the positive amidst the onslaught of the news headlines.

As this is a column ostensibly about real estate, the market is seeing more buyer choices as the inventory of homes for sale climbs. The lock-in effect that has kept so many existing homes off the market, that was based on the ultralow post pandemic mortgage rates, is beginning to fade. More than a third of outstanding mortgages now have a rate above 5%, compared with a fifth in 2023. 

Most sellers are still sitting on a significant equity cushion, so the more motivated can cut asking prices. So far this is a trickle, but as buyer momentum shifts, there will be more serious price declines. This is not yet “affordability” but it’s on the horizon.  Life events like death, divorce, and relocations for employment will force sellers into realistic pricing. And that big equity cushion only exists on paper unless an actual sale occurs, so retirement or moving to a warmer climate will also stimulate more inventory.  

The thawing of the existing home market has repercussions for new home construction.  In the face of weakening buyer demand, lumber is now around $525 per thousand board feet, down from the $800s a year ago.  Other inputs are becoming cheaper too, and if it wasn’t for the new tariffs and AI data centers appetite for copper, the price of a new home could be significantly reduced.   Labor costs have declined as well with fewer spec homes under development.  These things take time to ripple through the system – the effects will be seen in lower housing prices in 2027.  

The new year will also have the mid-tern elections behind us, and I suspect an end to the US involvement in Iran. With those uncertainties out of the way, inflation should ease, and the Treasury market will stabilize.  Mortgage rates (loosely tracking the ten-year Treasury) will average around 7.5% because the U.S. deficit cannot be ignored: financing that debt is expensive. But after four years of an unsettled market looking to find some sort of equilibrium, real estate will not be the slow-motion car wreck.

My last bit of positive news is the passage of Senate bill 4668, the Protect College Sports Act. This bill is a comprehensive federal framework intended to stabilize college athletics amid the rapid changes and huge money involving NIL (Name, Image and Likeness), athlete compensation, conference realignment, and transfer rules. It is co-sponsored by Sen. Ted Cruz (R‑Texas) and Sen. Maria Cantwell (D‑Wash.) and has broad bipartisan support. It still requires House approval.  With all the pressing issues everyday Americans must deal with, it’s good to know that Congress could get together in a super-rare instance of bipartisan support to pass this legislation.  Sorry, couldn’t resist…

Raphael Barta is an associate broker with an active practice in residential, vacant land, and commercial/investment properties. He can be reached at [email protected].