Home Values and the Economy

August 2nd, 2016

In Sioux Falls, South Dakota home values are up about 10% for the year; although the number of units sold are flat with no increase. We tend to think of a hot market where the demand is so high that prices and number of homes increase. I had a person ask me recently, ‘why aren’t both sales and prices up this year?

Naturally, a short supply of homes with strong demand will push prices up. It is one of the economic laws. In our present position, the greatest demand for homes is in the first-time and second-time buying brackets where it’s difficult to reproduce with new construction. The cost of new housing has had a fairly significant increase over the past year. Therefore, with an inventory shortage coupled with high demand, both sales numbers and prices are up only in these price brackets.

The reason for overall flat sales numbers is two-fold; one is due to fewer units selling in the upper brackets which off-set the increase in the lower brackets. The other factor is new construction sales; which are seldom included in the numbers supplied by the Realtors Association.

One question I hear every day is ‘what’s going to happen to the market going forward?’ I presume the question has an underpinning thought about the upcoming election. I hope not to touch on the sensitive political side of this; although, I think nearly everything is political, especially with the emotionally charged environment today.

It is a proven fact, the greatest driving force behind any economy is household income supplied by employment. When people have money they spend it and it multiples throughout our country. The driving force behind this current economy is low interest rates; this hasn’t, and won’t, help much long-term, it just allows us to pay less for things today. In truth, low rates actually hurt those who depend on their savings for income and sets the stage for inflation. Unless more jobs are created and wages increase, there is little logic to think the economy can grow to any level of strength and therefore the real estate market will falter; values will drop. Although, this could be good news for landlords, as more people will rent.

One thing we know for sure, people need a place to live. Regardless of the short term ebb and flow of real estate cycles, ownership has always been a great long-term investment in addition to the lifestyle it creates. The key is to always be invested. And, sometime in the future, when there is no more need to own is at hand, there will be a good asset to call on for greater comfort.

The fall market begins in August and picks up speed until Thanksgiving. If you are thinking about moving, plan 3 to 5 months for the entire process; which means there is time to get settled before winter.

We invite you to call or text. 605.359.4100

Tony Ratchford, Broker, CRS ABR, SRES

Freedom 2016

July 6th, 2016

On July 2, 1776 the Continental Congress made a Declaration of Independence as a free nation. We eventually won our independence from England, and the birth as the United States of America began.

Later, The Constitution and the Bill of Rights were adopted to create checks and balances for the three branches of government, to protect individual rights, support liberty, encourage limited government, establish natural law as theory for governance, create a republican government, and to strengthen sovereignty.

People who live in the USA experience great freedom compared to the rest of the world; although, there has always been controversy about how much freedom is appropriate. Too much freedom can lead to anarchy, and too little can lead to tyranny. The Constitution was intended to protect us from both, and the Federalist Papers were written with hope we may never forget the history and foundation underpinning the document.

Their writing supports the individual’s right to pursue the American Dream of Life, Liberty, and Happiness.

Our country survived and flourished due to the contribution of many. James Madison, Alexander Hamilton, and Thomas Jefferson, in particular, were strong advocates of Free Enterprise. They believed entrepreneurs should be free to build businesses, take risk, and hopefully enjoy reward. They also knew businesses could provide jobs and opportunities for others as well. It is a proven model that has served our country well.

One result from this economic approach is home ownership. Today, more than 62% of all households either own or are buying their home. Ownership continues to be the most desired piece of the American Dream. It has become a symbol of freedom and security; and it’s as healthy as it has ever been.

With that said, may I salute all of the brave entrepreneurs who help make our world a better place to live and to all the homeowners, and soon to be homeowners, who celebrate our freedom.

And, in the words of so many of our leaders, God Bless you and God Bless America.

Tony Ratchford, Broker, CRS ABR, SRES

How The Middle Class is to Survive

June 7th, 2016

How the Middle Class is to Survive

Last month I wrote an article with reference to Adam Smith. To my surprise, and most everyone’s confusion, hardly anyone understood what I wrote about.

The message was intended to promote Free Enterprise, as it has been the essence of economic foundation for this great Nation, and the driving force for a prosperous lifestyle.

Some will disagree with me, others may be confused, but most everyone will agree America, from the beginning, became the strongest and most powerful country in the shortest period of time and remains so; longer than any other in history. The foundation for this was developed from a handful of people, led by James Madison with the teachings of Adam Smith.

Capitalism has gotten a bad rap, mostly due to political involvement, and is often referred to as crony-capitalism. It all began in 1913 when President Wilson, John Maynard Keynes, and a handle full of power individuals, developed a great scheme which included a national income tax and a national bank (the Federal Reserve).

Politicians now control expenditures to a higher degree, which naturally breads corruption. They hand out favors in return for votes. We hear it every day, “vote for me and I’ll give you more stuff” or, “we’ll tax some people, and we’ll give it to those we choose.” This a socialistic attitude.

The problem is, Capitalism can’t work freely in a highly controlled environment of heavy regulations and taxation, which is happening today and is exactly why the middle class is in trouble.

A really good example of pure Capitalism is the rise of Andrew Carnegie, JD Rockefeller, and JP Morgan. Some say they were ruthless and cold hearted, others could argue they created millions of jobs, built huge companies, and the USA experienced a remarkable economic boom not duplicated in history. We still see positive effects of their wealth throughout the country, both economically and culturally.

I read a great article in the Argus Leader by Jodi Schwan recently, it reminds me of what I have thought for some time. The middle class is feeling the pain from over-reaching government regulations (Obama has signed over 10,600 restrictions on our freedom) causing higher living cost and taxes in general. This is the reason why the middle section of the housing market is not performing as well as others.

It’s a clear fact that small businesses are having a difficult time keeping up with the cost of red-tape. We are losing small businesses at a historic rate and fewer new companies are being started. This situation is getting worse instead of better.

Today, only 62.6% of the workforce is employed; the lowest level since 1980 and wages have increased just 2.5% over the past decade. The stock market looks favorable, but it closely follows the growth of money supplied by the Federal Reserve. Perhaps we feel better when we look at the numbers, but people I speak with are feeling the squeeze between income and expenses, to the point of holding back with purchases in all categories of life.

The solution, in my opinion, is to return to the foundation that made us great. Embrace small businesses and entrepreneurs who create jobs. Without jobs and higher household income, there will be no growth. It is that simple! There is no money tree and you can’t take enough away from those who have money to do the crazy things some politicians are promising. There is no reward without effort, and to those who believe otherwise will continue to feel the pain of slavery to the powerful – a life our ancestors ran away from, an economic/social environment that is referenced as Feudalism.

Remember, if we let someone dictate to us how our lives should be, we are most likely not living the life we want. We are a lot happier when we take charge of what is best for us, and embrace freedom as the greatest gift the constitution created for us.

Please remember those who died for our freedom this month, and may you enjoy a great time of celebration on Independence Day!

With that said, real estate still continues to be a great investment, and owning your home can offer an opportunity for having the best lifestyle possible.

We invite you to call or text. 605.359.4100

Tony Ratchford, The Tony Ratchford Group. Broker, CRS, ABR, SRES.

Keller Williams Realty Sioux Falls.

Philosophies Divided

May 17th, 2016

Philosophies Divided

It’s hard to ignore the economic news and rhetoric from the political arena these days. One has to wonder how did this craziness arrive and how will it affect real estate and our lives going forward?

Let’s begin with some headlines. GDP is less than 1% for the first quarter of 2016, the top 20% income earners pay 84% of federal income tax, huge crowds gather for the self-proclaimed socialist Bernie Sanders, the unabashed Donald and tired Hillary are presumptive presidential nominees, millennials look for answers after graduating college with a degree that can’t get them a job, murders are up 17% in 2015, national debt sets a new record, more than 86,000 new federal regulations were implemented in 2015, household income last year was the same as in 2009, and the list goes on…

Where is Adam Smith when we need him?

For those of you who haven’t heard of or read about Adam Smith, he was a noted scholar from the 1700’s who studied, taught, lectured, and wrote about the philosophy of economics. He began his studies in Scotland and England with a passion for the common man; hoping to find them an answer for a better life.

He studied societies of the world in depth, both present and past, focusing on morality, values, and motivation. He ultimately determined the individual is the only solution for their destiny; not government nor any other controlling institution. He concluded, to succeed at anything we must control the environment around us.

Some accused him of preaching greed and selfishness, but on the contrary, he discovered we are happier and more successful when we rely on our rational self-interest and live with mutual sympathy (empathy) of sentiments for others. Often referred to as the Father of Economics, he professed governments should provide safety with the least amount of involvement in our lives. He was exceptionally influential with our Founding Fathers and the writers of the United States Constitution and the Federalist Papers. His leadership set forth a fundamental outline for our Country’s long-running prosperous journey.

You may be wondering how this affects real estate? We have discovered, for people to buy houses, they first need to have a job and income. Free Enterprise and competition has been and will always be the foundation for a successful economy. Socialism has not worked anywhere in the world at any time for any length of time. Free enterprise has outlasted every other system and is the foundation for invention and development. Success is not luck, it is driven by hard working and smart people who have the motivation and desire for a better life. Businesses are developed by those who want more out of their lives, and in return create opportunities for others to do the same.

The middle class has had a rough go over the past decade. Household incomes are stagnant and cost of living is going up. People are tired of rhetoric, regulations, and wasted taxes.

American leadership, as it has been for decades, is a house divided by philosophies on how to govern. Apparently, the road we are on isn’t working so well. The current political climate has many people wanting to see a different approach to leadership, regardless of party affiliation. The current path is unsustainable, and it demands more fiscal responsibility and economic growth if we want the economy to continue supporting the lifestyles we have and a continued healthy real estate market.

What is needed are more entrepreneurs and self-directed people creating and developing more opportunities for everyone. It’s time to get the red tape out of the way and let Americans do what they have done for centuries; be inventive, build businesses, and create jobs.

As always, we invite you call or text anytime. Learn how to maximize your dollars, save valuable time, and have peace of mind knowing you doing the right thing at the right time!

All my best

Tony Ratchford
Broker, Keller Williams Realty Sioux Falls
The Tony Ratchford Group

Hello Sweet Springtime

April 6th, 2016

Historically, Easter has been a kick off for spring real estate sales…there is something about this time of year, as well as New Year’s Day and Labor Day. It is a renewal time for many; a fresh start.

So far this year we have had an early start, sales have been brisk for the first-time-homeowner and move-up-buyers. Some homes for sale haven’t lasted but a few days on the market. This is mostly driven by buyers leaving their apartments and low mortgage rates of 3.5% for a 30 year loan, and 2.75% for 15 years. It’s almost cheaper to own than rent.

Interestingly, the national trend is for young people to rent, more so than purchase. Surveys indicate younger buyers don’t see as much value today in owning; and, they like the flexibility of mobility. In Sioux Falls, the NAR housing index indicates the average person makes two times the money needed to buy an average priced home; this is one of the highest ratings in the nation. Values continue to increase, and homes remain an excellent investment, as well as a place to live.

This is a tribute to our principled Midwest belief system, as well as a growing economic environment in the Sioux Empire driven by Free Enterprise. Jobs are reasonably available, and there is slight pressure for wage increases.

We expect continued low mortgage rates and robust home sales throughout April and May and perhaps into summer. Home values below $350,000 have increased in direct proportion to price bracket with the lower brackets increasing more than the upper. Sales above $400,000 have been erratic with newer style homes leading the way; it’s hard to predict what may happen going forward, as this price range is mostly driven by household income and economic stability.

Certainly it’s easy to say that the sun is shining both physically and philosophically on our great region today. We hope you have a fabulous spring, and remember we are only a telephone call away from being of service to you. Our goal is to always look for new and better ways to create value for you.

We invite you to call

Tony Ratchford,
The Tony Ratchford Group. CRS, ABR, SRES, CLHMS, Real Estate Broker

Winter is Over

March 8th, 2016

The sad thing about this past winter was the lack of sunshine. Some people reel during this time from Seasonal Affective Disorder; depression with the onset of fall. Low energy and hopelessness can be some of the symptoms. This could also be said of the real estate market.

It’s interesting how active the market has become as we approach March. The days get longer, sunshine is warmer, and more optimism is prevalent.

There was a time this winter when the consumers were complaining about everything. Poor economy, too much snow, gloomy days, not enough homes available to choose from, not enough buyers… and the list goes on. Today, we are seeing just the opposite on some of those negative statements.

Interest rates remain rather low with 30 year mortgages well under 4% and holding steady. Although inventories are stubbornly low, there are many more homes coming on the market and will continue to do so as we go further into spring. Unfortunately, good homes sell fast; therefore people who are hoping to get the right house must be prepared and ready to act quickly. Sellers wanting to move to a different property don’t usually have the opportunity to identify first where they are going, making a plan even more important. A purchase, contingent upon selling their existing home, won’t work very well this year.

The Sioux Empire economy appears to be solid, and perhaps employees may even see significant household income increases for the first time in nearly a decade. Optimism abounds as people take home more money. A caveat to the economy is the cost of health care mostly affected by insurance; which is certainly driven by The Affordable Care Act, an oxymoron, and a major disruptor for most middle class families.

My projections for this year: Many price range sectors will experience good activity and solid price strength, in particular the entry level homes. The upper-middle ranges could experience a tough go this year, due mostly to higher cost of living expenses without higher household income (as of yet). We are seeing many people in the 30 to 50 year-old market putting their moving plans on hold. Time will tell as we go farther into the year, but spring will be tentative. The empty nester market will probably lead the way for activity this year.
The more complicated the market becomes, the more important it is to plan.

We hope you enjoy the sunshine and warmer days!
Tony Ratchford,
The Tony Ratchford Group. CRS, ABR, SRES, CLHMS, Real Estate Broker for KW Realty Sioux Falls

Valentine’s Day, a gift for you

February 2nd, 2016

Is it a conspiracy? Have the card, flower, and candy companies along with the restaurants conspired to get our money; or, is there more to Valentine’s Day? There is a history behind this celebrated day, but the truth is most of us don’t care, it’s an innocent time of folly.

I was thinking the other day of the negative noise going on in today’s world and what a relief it would be to stop it all for a short time. Turn off the electronics and time travel back a few decades when we knew things weren’t always the best, but we didn’t have to be reminded about it all the time.

That’s why Valentine’s Day is so great. it’s about a romantic time of love, friendship, and simple fun. I think back a few decades during my elementary school days giving silly cards to classmates and sharing homemade cookies and treats. It was a terrific break from classroom studies, and as I get older, a welcomed break from realty.

Imagine how cool it would be if we could have a few moments every day, or every week for such a time of fun and innocence? Thankfully the retailers were smart enough to put Valentine’s Day half way between Christmas and Easter, it certainly breaks up the winter doldrums!

I’m thinking how great a gift could be this year for that someone special. An often talked about gift that seems to be pushed aside for another year. It’s better than a box of chocolates, a Hallmark card, or dinner out; it’s a gift that keeps on giving every day. Of course, it’s a new home and there isn’t a better time than right now to get one. Low interest rates offer great buying power where you get more house for the money.

The Tony Ratchford Group has a process that is perfect for helping you maximize your dollars, saving you valuable time, and giving you peace of mind knowing you are doing the right thing at the right time, with the right people.

We invite you to call and we’ll help you with that gift, we’ll even wrap it in ribbon and put a bow on it.

Wishing a great month of fun and folly!

Tony Ratchford,

CRS, ABR, SRES, Real Estate Broker, owner of KW Realty Sioux Falls. Founder of Ratchford On Purpose.


The Joy of a New Year

January 5th, 2016

The best thing about the end of a year is the beginning of a new one; a chance to review the highs and lows of last year. A time to embrace the positive and purge the negative, reset for next year.

Failure is one feeling that rears its ugly head when a goal or dream is unfulfilled. Too often we focus on the things that didn’t go right, instead of acknowledging those that did. We dwell on the space between accomplishment and desire, instead of the accomplishment itself.

The truth is, we seldom hit all of goals. This is especially true for the high achiever, who generally demands more of themselves than is realistic, or to those who have less conviction.

Staying motivated is always driven by our value system. We must have a solidified desire to have something more than just the goal, the gift we receive when something most important to us is satisfied. We also need to protect our confidence by acknowledging the progress we made, the accomplishment we mastered, and the gains we received. Focusing on what you didn’t do only destroys confidence and motivation. It can be shaming and defeating.

A primary factor in reaching your goal will be the action one puts forth. Having a dream is fun, and will generally remain so until an action plan is developed and followed. People who have a goal, but fail, usually don’t have a well thought-out plan and/or intentional behavior to take them to the finish.

I have a personal goal of spending my senior years with my children and grandchildren. My family history for longevity doesn’t favor that dream; therefore, I must counter that predisposition by exercising, eating well, and staying active. My goal is to stay healthy; but, the internal value and real driver behind the goal is family.

What are your dreams this year? What burning desire do you have? Is there anything that has been pushed aside or tried before and not accomplished? Perhaps this is the year. Reach down inside and find what gives you energy and purpose. Write it down, think about it, and get an idea of what you can do to make it a reality. And remember, life is about progress, not perfection. Embrace every step of achievement and stay focused on the next step.

May you find great joy in all that you do this new year!

Tony Ratchford,

Real Estate Broker, CRS, ABR, SRES, and co-owner Keller Williams Realty Sioux Falls




The Spirit of Christmas

December 22nd, 2015

The history of Christmas may have begun more than two thousands year ago when people rejoiced around the winter solstice. A time when the shortest day of the year had passed, people would rejoice and feast on fresh meat as animals were harvested for the winter, and wine flowed from fermented grapes.

The Catholic Church wanted a day of celebration for the birth of Christ and hoped to turn the winter celebration into a religious event, declaring December 25th as the birth of Christ. By the eighth century, the Feast of the Nativity had become widespread throughout Europe, although it wasn’t celebrated in a religious manner but more of a raucous carnival. The Puritan’s in the sixteen century actually outlawed the celebration.

The idea of Santa Claus has roots from the third century. A monk known as Saint Nicholas of Myra was noted for giving away all of his inherited wealth to the poor. Washington Irving and Charles Dickens embraced the goodness of Christmas and family celebrations in their early 1800’s best-selling novels, and Robert May with his tale of Rudolph the Red Nose Reindeer in 1939. The USA officially declared Christmas a National Holiday in 1870, nearly 150 years ago.

With this said, why do Christians and others need to be embarrassed or reluctant to convey a hardy Merry Christmas when approached? Christmas is not just a religious holiday, but a social holiday as well with gift giving, tree trimming, a time of family gatherings, and office parties. Christmas is simply a season or day which is set aside for celebration. Whether you are a Christian celebrating the birth of Jesus Christ or just enjoying a happy time of year, we wish you the best of times with loved ones and friends, and of course, a Merry Christmas!


Tony Ratchford

Falling Events

November 3rd, 2015

Welcome to fall, the season is in full swing with cooler days and changing colors. As we prepare for winter, some of us wonder how the housing market will react.

Whether you are selling or purchasing, there are two major factors to be aware of. The first one is the time of year. Usually slower activity is experienced during the months of December through February; although, January can be a great month if the weather is reasonable.

The biggest factor by far, is the economic law of supply and demand. This law dictates whether we are in a cycle of buyer advantage, or seller advantage; values are decreasing or increasing respectively. It is simply computed by the amount of inventory divided by the number of homes selling on the average each month; we refer to this number as the absorption rate.

To determine which consumer has the advantage, we take the number of homes in a specific category, and divide it by the absorption rate for that category. If the calculated number is greater than five, the buyer has the advantage; below five, the seller has the advantage.

Sellers have had a good run for the past eight years. Market indicators are looking like we are shifting toward a buyer’s advantage for most price ranges and categories. Coupled with a slower activity season, buyers may have a great opportunity to find their best value this year.
Mortgage rates are also affect buying power. Rates are in the 3.75% range for a 30 year loan; 3% for a 15 year. This can give a buyer 10% more purchasing power than if the rates were 4.25%; which is what they were earlier this year.

Unfortunately, sellers won’t like the decrease in values; but if you are thinking of moving up, you will have a terrific opportunity to get more house for less (both in total investment, and in monthly payments).
Some people see this as negative; when in reality, it is just a natural cycle of life and occurs every seven years on the average. Embrace it and enjoy. The hardest part to this is sellers are usually the last to recognize the shift. They fight the data and end up taking much less later, or not getting their house sold.

The key to a successful housing transition is to have a complete understanding of what you want to accomplish, and a full assessment of market conditions. The goal is to maximize your dollars, save you valuable time, and have peace of mind knowing you are doing the right thing at the right time. This is what we specialize in at the Tony Ratchford Group.

We invite you to call or text, 605.359.4100.

Tony Ratchford, Real Estate Broker, CRS, ABR, SRES