With 2020 feeling like one of the slowest years on record and 2021 feeling like the fastest, 2022 is here. There is a lot of speculation around what is going to happen in real estate. Here are my predictions based on the data.
- Prices won’t go down. This is strictly a supply and demand issue. There aren’t enough homes to go around to keep up with demand. Because of this, prices are likely to remain stable. This is especially true in Los Angeles where there isn’t enough land to build homes, let alone homes under $1,000,000. Plus, as mentioned in one of our more popular articles about the cost of building, the idea of affordable single-family homes is in the rear-view mirror.
- Rents are expected to go up. The difficulty of being a landlord continues to worsen, which means some landlords may move their investments out of state. We have a client where we recently sold his investment here in LA County and he just closed in Tennessee. We are in discussion of selling two more of his rentals here in Los Angeles, taking 3 units away from the rental market. This will decrease the inventory for tenants.
- There will be an increase in inventory, but in select demographics. For example, we may see condos on the rise due to household formation and those wanting to cash out from their initial purchase back from between 2009-2016. The other market is the Baby Boomers who need to downsize. Homes that are two story and maybe even larger homes may pop up. The downsizing may not be out of desire, but out of necessity.
Of course, time will tell. In either case, it will be a good time to buy and sell real estate. The only difference this time is you need to be clear in your intentions and goals.
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