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.