HAPPY NEW YEAR FOR REAL ESTATE?

Time will tell, as it always does, no one’s crystal ball works perfectly every year. But analysis of current conditions and data would lend one to conclude…more of the same? The answer is sort of, but not really. Yes, inventory will remain tight. This country and California specifically, has a tremendous housing shortage. A recent Wall Street Journal article criticizing the “old, vintage, good bones” theory, surmised that 700,000 new homes would need to be built for at least the next 3 years, to truly take the pressure off the resale market. That being said, inflation is at its highest in years, which has already begun to increase interest rates, and more increases are almost certain. The actual numbers, highlighted in the next section, do indeed reflect a slight cooling in volume, but not in price. That’s the conundrum that buyers and sellers will face, finding the right price. Nothing will slow a market faster than greed and unemployment. We have a bit of both. The Great American walk off may be voluntary, but it’s still unemployment. As far as greed, buyers will say enough, at some point. The pandemic will likely become endemic, but herd immunity is far from certain, with the many variants. So this will continue to be a real time disrupter. Real estate always-continues on because of necessity of housing, making it different from other areas of investment. The adage of doing your homework and seeking competent counsel remains in play for 2022.

WHAT ARE THE ACTUAL NUMBERS?

The latest complete month available is November 2021. All numbers are year over year comparisons to November 2020. The total number of sales was 3,181, a slight decline of 3.5%, however the median price for all sales was $919,000, a 14.9% increase from the previous year. The resale market rose 17.3% to $1,032,000, but sales dipped 3.2% to 1,977. Condos had the greatest appreciation coming in with a median price of $650,000, a 19.5% rise. Sales were also off with a total of 893, a 4.3% drop. New homes were fairly static, the median price $941,000, up 0.2%, and sales off 3.1% with 311. The average monthly payment rose significantly to $3,939 from $3,464, a reflection of both higher rates and prices.

WHERE WILL TECH SHAKE UP THE MARKET?

1) Mortgage approvals will speed up. 2) As a result of #1, appraisals are agonizingly slow as there are not enough appraisers, however technology will continue to streamline virtual or “desktop” appraisals. Fannie Mae and Freddie Mac have already signed on. 3) Cash is king and “rich uncle” companies are stepping in to speed up acceptance times. (Home Ribbon, Unlock, and Better.com to name a few.) Remember nothing is for free, so check their fees and repayment times to obtain your own financing after close of escrow. 4) NO BLOCKCHAIN type products for now—bitcoin and other crypto currencies currently not in use. Digital assets are very different from brick and mortar. Housing continues to be quite unique in that respect.