This feels like a housing market that has exploded in 2021 DESPITE having both hands tied behind its back!
Let’s look at what’s been going on:
- Offices remain at 20-25% occupancy
- Limited access to the US from Abroad
- COVID remains an active concern
- New York still recovers from the mess of 2020.
And with all of that, the market is still roaring.
With this is mind, it seems there are are still three things which should catapult the market forward. They are:
- Inflation, including a Rising Mortgage Rate Environment
- Opening of the US Borders
- Vaccines for Kids
Inflation and Rising Mortgage Rates
We’re starting to see signs of tghe end to our historically low mortgage rates. While the Fed doesn’t seem to want to do anything quickly other than to signal an end to their bond buying, mortgage rates are likely to rise in 2022. The pressure of rising rates, while somewhat concerning to buyers as their purchasing power is slightly diminishes, does more today to pressure the market, and to get buyers to act today. Conversely, it helps all-cash buyers over time to be more competitive. They may not see massive discounts, but it will help them win more deals.
Further, inflation, which is the inevitable conclusion of so much cash injection into the markets from the Fed, is already having an impact. Inflation is tracking now, and that can’t help but drive assets prices up. Read more here.
Opening of the US Borders
If the housing market is roaring without foreign buyers, imagine what’s going to happen when they step into the market. November 1st, we press the green button. Read the article here. Pent-up demand from the entire Trump term, plus the time when travelers couldn’t be here, adds up to one thing. A wellspring of buyer activity. The world will start coming back to visit our shores. New York is the first stop. Look out, folks!
Vaccines for Kids
The longer I look at the past eighteen months, the more I realize that children and their being physically in school is the lynchpin to our society’s advance. Once our youngest cohort can get their vaccine shot, the rest of our puzzle falls into place. This will undoubtedly put us on the road to normalcy in a way that we haven’t yet seen. This means reopening of offices, many people going back to work in general, and an enthusiasm about many things going to a rejiggered normal!
I’m not even thinking too far along about how full hotels, more people in their offices in Midtown, or any other post-Covid progress helps the market, too. Let’s just say that we have enough wind in our sails to get us pretty far along. -S