For the last 2 to 3 years, people have been asking, “When is the next downturn?” “How much longer can this Seller’s Market last?”
Traditionally, the real estate market experiences a downturn every 10 to 12 years, however, at this time, due to the increase in migrations from cities and states with high income and sales taxes, (NY, PA, CA, Washington, D.C) this cycle has been delayed. Both companies and investors are relocating to South Florida. No one can say when this will change, but this is the time to take advantage of the market. We usually don’t realize historic change is happening until it’s already has taken place, and by then it’s too late.
Fortunately, real estate shifts rarely happen overnight. We believe that there is still time to take advantage of the seller’s market. I share with you my thoughts for 2022:
Six to twelve months from now, we will all look back and identify Q2 2021 and the Q3 of 2022 as the point where the market peaked and stabilized.
To be clear, I’m not saying values will crash. But I am certain they will have stabilized and will correct, in late 2022 or 2023 and beyond.
Now, I don’t really think this is a bold prediction, I think we all intuitively know it. We have seen this happen during the Jimmy Carter years with 18%+ interest rates and high inflation, the Days of the RTC and, of course, 2007/2008 when the market crashed, which we saw end in 2010, We are now 12 years since the last recovery.
I think it is important that we ask ourselves, out loud, “What actions are we taking in light of this new reality?”
In my world of real estate sales brokerage, I can think of three big answers to that question:
1) Review your portfolio to identify any properties you may want to sell in the next one to two years. Then call me to explore your options to sell now or refinance and hold. Both are proactive decisions if you make them. Everyone has different circumstances that must be considered. We may miss the peak of values, but we are still at or near the top of the market crest and avoid Meaningful decrease.
2) Review your portfolio and identify any properties that may need to be refinanced, as the rates are still at the lowest they have been and, with the current inflation rate, mortgage rates will only increase. I can help you with this through Sperry Capital.
3) Consider rent adjustment in your leases. Start putting in annual CPI or floor & ceiling of 3 to 7% increases into your leases. Most landlords are adjusting their new leases and have moved away from fixed rent increases.
Today, my friend, the future is staring us right in the face, telegraphing what is coming next. What will you do with that information?
Let’s schedule an appointment and review your properties to help you determine the right course of actions for your situation. SperryCGA has offices though out the US and can advise you in multiple markets. I have been helping real estate investor and owner/users since 1978.
Let us help you maximize the value of your investment.