We all left 2021 in a state of obvious and unarguable growth and new successes around many markets. There are many factors that are considered in the emerging trends in real estate and economic growth, however, one question remains:
Where Could This Go in 2022?
Is it the top of a peak or are we at a historical stage of transition where new levels of consumer demand are being met by technology solutions that withstood a global pandemic?
The abundance of capital on the sidelines tells us one thing though: If an economic correction happens and it creates pricing opportunities then it’ll be a soft landing with new appreciation on the other side. Regardless of how deep it lasts, there will be opportunities to cling to until the next recovery and upward trends in values. Why?
Now we know and see local consumer habits very clearly.
Even the Leading Economic Index points to more growth in early 2022, and the Consumer Confidence Index is pointing higher as we start 2022:
Employment & Wages Trends 2022
Employment is still low, wages and inflation are increasing, borrowing rates are fluctuating and cost of goods are rising. We can afford all the price increases right now because rates are low, we’re making more wages, and certain subsidies were made available.
Only the consumer can slow this down by throwing their hands up in frustration because they’re having to wait on the supply chain.
If The Supply Chain Figures Itself Out, Then What?
If the production of goods increases to a level of abundance when consumer demand slows, then the excess inventory might be sold at discount. We’re at a point in the cycle where everyone is asking “how much longer can this last?”, which usually means it’s almost at the point of change.
Even if it’s a self-perpetuating prophecy, there’s a natural order that things must counterbalance themselves. Nationally, the Fed will start changing its course on interest rates. Although it will not be a drastic reversion of current policy, it will have an effect.
Factor in Economic and Population Growth of Forida
Locally, on the west coast of Florida, we have been so undervalued and under-supplied for so long. Now, more people, businesses, and investors are moving here permanently. People are moving to West Florida in droves and our little secret is out. This brings a new elevated level of competition, property values, consumer demand, and quality of life among residents and businesses alike.
Predicted Impact of Population & Industrial Growth on Emerging Trends in Real Estate
Those moving here from out of state, with buying power, realize the value they can get from relocating their families and/or businesses to Florida. This creates price increases that locals are not familiar with, but now have to deal with and compete with. Could there be a soft landing with a price correction? Yes. Will prices drop back to previous levels? Probably not.
There will more than likely be a new baseline of values created that’s lower than today’s averages. However, these values will be higher than in previous years. This will come along with yet another run-up in prices once we acclimate to that new normal and realize how we can capitalize. Timing is everything, and it’s going to be hard to time this one over the next couple of years.
The timeline of price correction could take up to 2-6 years with regard to the factors above. Things might not be so clear now. However, if you’re paying attention and using discipline, then this economic direction could be beneficial.
Contact Fortress Commercial Real Estate today to ensure you are ahead of the curve in any economic situation!
