If you’re a real estate investor, you are well-accustomed to riding its wild rollercoaster of ups and downs. Will it crash? You panic because it sure seems like it will – until it doesn’t, when you are able to calm down and relax. So, what is up with the real estate market of 2021? Where will it go in 2022? Will prices ever drop back down to something approaching reasonable? Tristan Bishop Pan reveals the answers.
“The real estate market will eventually have a correction phase. If you live in any of the major cities within the United States, you know that prices for real estate are going crazy,” Tristan Bishop Pan says. “Everyone is offering so far above the listing value that it’s continuing to further the real estate boom.”
Tristan Bishop Pan explains that until now, real estate has been one of the largest makers of wealth of all time. “Real estate is a finite supply, and no more is being made unless you count land reclamation, like in Dubai. When the supply dwindles and the demand increases, the prices go up. With the global COVID crisis, people are not selling their real estate, but many people are continuing to buy, creating a vacuum in the market for prices to continue to rise.”
To understand why the real estate market is so crazy, it helps to remember its history, Tristan Bishop Pan believes. “Remember that In 2007, the real estate market crashed due to hyperinflation in prices based off of mortgage-backed securities that were made to look pretty even though they were doomed to fail. In short, we made an artificial demand by making it so easy for anyone to get a house, even people that could not afford the house long term. When the cup had run full of these loans, it spilled over and toppled the entire thing. Some people argue that we are doing the same thing now by having an artificial demand based on a supply shortage that is caused by an uncontrollable external factor.”
The question, Tristan Bishop Pan says, is when the correction is going to come.
“In the United States in particular, we are going to have a correction,” Tristan Bishop Pan thinks. “Go ask the gurus in real estate. Most people agree we’re going to have one, but it’s not going to be as soon as you think, and it won’t be as hard as you remember 2007 to be. This is mainly due to the fact that the scarcity in supply is not really artificial but is instead driven by a change in trend of social paradigm. That trend change? The Great Resignation.”
“Every major construction company is shorthanded, and projects are falling far behind,” Tristan Bishop Pan reveals. “The cost of general contractors is going through the roof because there is so much more demand for their time and fewer available workers to get the job done. People did not go back to work for the salaries they once held, realizing that there are opportunities in technology and development that can pay much more and be less stressful. The Great Resignation will be marked as a historical change in employment and social responsibility that has been discussed for years but has been unable to garner the support it needed to get through our current social norms.”
Tristan Bishop Pan says that COVID made that happen and that the supply in the housing market won’t be correcting anytime soon. “The Irony is that those same people who quit their minimum wage jobs to find more meaningful and profitable work can now afford housing, but there is no housing to be had because there is no one to fix or build homes since contractors cannot find enough workers to keep up with the demand.”
This means that if you’re looking at investing in real estate or buying a home and you’re waiting for the market to crash, you’re going to be waiting for a while.
Tristan Bishop Pan continues by saying that the 2007 demand was artificially made but that this demand is largely real but is based on exterior factors that may be temporary. “When a correction happens, it’s still not going to be as bad as you think because the supply and demand index is still hugely, hugely lopsided. There’s more demand than there is supply. As long as that is the case, prices will continue to rise. Also, our GDP has changed, our political climate has changed, and most importantly, our economic status has changed.”
So, if you want to invest in real estate, go ahead and do it, Tristan Bishop Pan recommends. “Now is the time to do it because I don’t believe the correction will come anytime soon, and prices will continue to rise. Don’t wait! If you do, you’ll most likely just end up losing out on better deals. If you have any doubts, seek out a professional who can help you to make educated decisions. You won’t regret taking that extra step.”