The roller coaster continues. Our business is reacting to the economic bad news with cautious optimism. We’ve been told there’s so much money on the sidelines that any dip in the stock market will be filled quickly, but that’s not been the case. We were told that the spike in the money supply would not be inflationary, but now we’re seeing 7.9% year over year inflation, the highest in 40 years. And we had an understanding that lending rates wouldn’t rise because we’re in a pandemic, but some loan products are up over 50 basis points since the beginning of the year.
None of this news changes the fact that the U.S. is in a housing shortage and a building shortage that will take years to balance out. Those leaving the workforce are coming back, finally, maybe because stimulus checks have ended or because wages are increasing, but these earners need homes.
I’m also dismayed after talking to people who believe they have that vision of the future and it says real estate is going down. They’re on the sidelines, saving their cash. Or worse, they are collecting more cash from like-minded investors. They lived through past downturns and today looks just like that. They don’t mind being wrong this year, or next year, or the next year, because one of these years they’ll be right.
We celebrate that 2021 was a banner year. Real estate investors prospered. One of the best years ever. But year after year we are intensely cautious because we don’t actually know what the new year will bring. Our caution leads us to remember everything we’ve been taught – picking recession resistant markets that show signs of continued growth, buying stable properties with opportunities to renovate and improve, invest in marketing to attract long term tenants, and invest in nurturing relationships with tenants so they are attached and want to stay. Because after winter comes and you can’t pay tenants to move in, spring arrives, then recovery. Don’t fear the winter, instead plan today to survive the winter, and to take advantage of the winter.