How Long Will This Market Last?

Question

The world seems to be in complete and utter chaos. LA has just entered into another round of shutdowns.

Civil Unrest, Global Pandemic, Record Unemployment...Election.

Yet, LA real estate is through the roof! Record breaking sales and barely enough inventory to feed the need of hungry purchasers. I'm relatively familiar with economics but I'm not quite clear on the state of things. Do you think this market will last? I understand that a potential vaccine has sparked more optimism, but what's next for this market and what should we be doing to stay ahead of the game?

John Teachout · Answer

It's clear that part of the low inventory issue is due to covid related reluctance for people to sell now. Also, it appears a lot of people are fleeing the cities so I would expect things to get more normal once covid is in the rear view mirror. ie, the supply will increase and the demand may lighten as well. This supply/demand adjustment will likely end the "frenzy" but doesn't necessarily result in any kind of significant downward movement in housing prices. Of course all of this is local and every BiggerPockets user is going to have different dynamics in their locale. To get a feel for people's thinking on the housing situation, it's enlightening to read biggerpockets posts from a year ago, two years ago, three years ago, etc. The same predictions are made with some regularity and eventually someone will be right.

Jeremy Wirths · Answer

In regards to SFR's - as long as inventory stays low and rates stay low I don't see anything changing.