Now that we’ve been dealing with the miseries of the COVID-19 pandemic for the past 2 years, it’s safe to say that the economy has become segmented into 3 distinct groups:
- Those who are only getting by
- Those who aren’t faring so well
- Those who continue to thrive
3 Property Investment Trends in California
Industries related to in-person retail business operations and travel are suffering due to disruptions in the supply chain. Yet the majority of Americans have adopted a “Just live with it” attitude while inflation is affecting everyone. This is the primary by-product of disruptions in the labor market, our money supply, and supply / distribution systems.
So where does this leave the investment property market? When you consider reduced office work, social gatherings, and travel, the hospitality and lodging industry will continue struggling through the balance of 2022. The following 3 trends will significantly impact the property investment market:
- Central California will become the Mecca for property investors – you’re probably thinking “Seriously? Central California? C’mon man!” According to our most recent research data, there were over 800,000 newly constructed homes sold as of December, 2021; 56% of which were located in the western part of the country including Central California. While this isn’t a new trend by any stretch, property investments accounted for a significant portion of those numbers.
- Inflation and rising mortgage rates – without getting into the details and reasons why, many Americans anticipated that the US economy would be plagued by these 2 issues over the past 2 years. We’ve seen historically low interest rates driving both the home buying and investment property sectors. Economic growth had significantly improved while inflation was negligible. With the pandemic adding to America’s miseries, our economic equilibrium was knocked to the ground. However, both inflation and interests have increased quickly since the beginning of 2022. We anticipate for these two factors to move parallel with each other the rest of the year.
- Multi-family and single-family rental property investments should remain strong – according to many real estate analysts, the price of for-sale homes increased nearly 20% during 2021. Plus, they are expected to increase an additional 11% during the remainder of 2022. Consequently, the first-time home buyer and younger families are getting priced out of the housing market and thereby leaving an increasing housing inventory ripe for property investors.
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The Bottom Line
This year is shaping up to be an excellent year for veteran property investors who understand the above trends and know how to take advantage of them as well. It’s no secret that unsettled, volatile housing markets always present property investors with outstanding financial opportunities. Thus, investing in your second or third home for renting out or listing it on Airbnb is one of the best ways to earn from your investments.
For more information, contact Granite West Funding at (559) 540-2275 at your earliest convenience.