Market Update Blog October 2021.
The market appreciation average in California for this year is 11.74%, and many of the states are even higher. The predictions for the next couple of years are that we will have an average appreciation in price between 3.0% to 5.0% until the year 2025.
Properties sold will continue to be high in the United States, 5,000,000 or more for 2021 and even next year. We have felt an increase in listing for sale in some areas on the single-family and investment market. However, more affluent or closer to the Beaches areas are still experiencing overbidding in single-family and investment properties.
A couple of reasons the inventory is expected to go up is that the vaccine will make more people secure enough to sell houses and do open houses, and it will make the seller feel good to have buyers walk inside their homes. Follow with the increase of new constructions and foreclosure properties with lots of equity for the seller to get out and move across the States during good weather.
We also experience during the beginning of Covid-19 more families selling their homes because of the death of relatives living in their houses. More investors were moving out of California to other states due to Rent Control and increasing State and Government Regulations. Capital gains fears are another significant factor that will improve the listing on the market. People are afraid to wait until later to sell instead of selling now and paying fewer taxes.
Regarding Investing in properties and 1031 exchange, we will see an increase in investors selling listing and going to more secure markets like DST, REITs, and Triple Net leases with big companies and trying to get a good return with companies like Starbucks and Walgreens CVS, Auto Parts, and Fast Foods.
Mortgage rates are expected to increase to 3.18% at the end of the 4Q of 2021 and up to 3.55% in 2022. If you are going to purchase a house, it makes sense to buy now that the interest rate is low.
For example, if you buy a home of $400,000 at the interest rate of 2.75%, your monthly mortgage payment is $1,633 (principal & interest only). Waiting for the same house at $400,000 and the interest rate going up 4.00% will cost you $1,910. This is an increase of $277 for the same loan payment.
The point is the longer you wait, the harder it will be to buy or sell or invest with inflation around the corner. And the Federal Reserve is also tapering Bond and Loan buying portfolio. It makes sense to call us to add us to your team of attorneys, CPA, and financial advisors.
