2021 Real Estate Takeaways
Many last year told me they had their best year ever in Real Estate. Both Lenders and Realtors. Wasn’t that way for me, but this year was. So why was that, and what can we take this to mean for the market ahead.
In addition to the certain luck of the draw, and seeds I had sown over previous years sprouting, Covid, for obvious reasons, has put the housing market on steroids. And this is not just high end or low end market specific, as fast and competitive sales have been happening this past year across all sectors. People want land to spread out on as a homestead and not just a crib.
Here are the trends I have observed, which to put in way of a number, have made me see on average my listings sell at 14% over the asking price. Leaving a popular sentiment in town, that the market is impossible:
End User vs Developer
Buyers being hard pressed to find a property in their preferred areas, will buy anything. So now End users are going head to head against Developers in competition to buy the same fixer upper & tear downs.
End Users Want Up Side
End Users will overpay as long as they have a value add play for down the road. This is their solution to spending so much now to get a property, is that one day they can scrape it, build new, and recapture what they over spent on. This makes competition more fierce.
Area Obsessed
In today's LA market, Buyers want a certain area. Often driven by social relations, family, schools, and safety, more than ever before Buyers are clamoring to get into their area of choice.
Rates
Rather obvious that when you can get a 30 year fixed mortgage at 2.75%, why wouldn't you want to buy now. Same pushes into Commercial Lending on apartment buildings, as lower Interest rates, can drive down the Cap Rate one would consider buying at--maybe 4% down from 5%, which with a lower rate still gets you good Returns.
Low Inventory
This is another obvious reason that with no one wanting to sell and they themselves get into the competitive Buyer’s swamp pit, will hunker down not listing their home. I’m in the same boat with my automobile, I would sell it and get more than I even paid for it 4 years and 40,000 miles ago, but then would be stuck over paying on a replacement ride. And so this is where I see the shift coming in the housing market next year.
So to that, 2022 will be a year where more homes are listed and rates inch up. Couple that with more folks returning to office life, and therefore not needing that extra space at home. These factors in my opinion will drive competition down.
This year my home market in Brentwood, so 10% year over year growth, and so in 2022 it may be just 5% is my prediction.
Look forward to facing the market in 2022 as your partner and seeing how we can best position you, as we have succeeded with our other fortunate clients this part year. Thanks for being a part of it in even the smallest way, and see you next year!