11/28/2020
What are your thoughts on what is going to happen to the price of real estate in the near future? I'll tell you about my two predictions and how the prices of real estate will have an inverse reaction.
1. There will be higher taxes under a Biden pres. and especially high capital gains taxes which will hit real estate investors hard. So before this goes into effect, many investors will start selling real estate, which will cause a higher supply and a drop in prices. In addition, with the effect of C-19, we will see higher unemployment which will lead to higher foreclosures rates and higher eviction rates. This is add to the supply. Baby-boomers will also be down-sizing more in their retirement.
2. As an unintended counter-balance to this, I also see the economy slowing down, which will have several counter effects to the real estate market. Baby-boomers will delay down-sizing and instead will take in children who have been hit the hardest with job loss and need to move in with parents. Baby-boomers will be withdrawing more from the stock market, which will cause a big drop in stocks. When the stock market drops people tend to reinvest in something more tangible, such as real estate. When people lose their homes to foreclosure, they still need a place to live, which will create a higher demand for rental properties.
Also, whenever the economy slows down, the Fed. Reserve's "answer" is always to dump more money into the economy. This leads to high inflation, which leads to higher real estate prices.
So, I predict that smaller homes and larger condos that would make good rentals will be the best investment. I predict that the rental market will stay strong with more people forced to rent.