With 2023 approaching fast, the question on every real estate investor’s mind is how they can best adjust their strategy to sustain profitability over the next year and set themselves up for long-term success. The national real estate market over the past few years has been characterized by increased volatility and widespread uncertainty—making it essential for investors to remain flexible and adapt to changing conditions. A fundamental component of this process is identifying trends and using them to inform your investment approach from both a short- and long-term perspective.

The team of financial experts at F.E. Forbes have been working with successful California real estate investors for over a century and know a thing or two about effective trend analysis. Read on to get our perspective on emergent trends and how you can use this information to position yourself for a profitable 2023.

Depleted Inventory Translates into Investment Opportunity

Based on data compiled by Freddie Mac, there was a shortage of 2.5 million homes at the start of 2020, a gap that has persisted to present with Zillow estimating that in January of 2022 there was a mere three months of housing supply—the most depleted level in over two decades. Long-term housing development has dipped 5.5 million starts under historical averages, capping off a 30-year steady decline to set us up in the current predicament we find ourselves in when it comes to the general lack of available housing units. To put things in perspective, between 2010 and 2020, less homes where constructed than from 1970-1980; however, the population growth in the 2010s was 123 million more than in the 1970s. This shortage has led to skyrocketing home values that put the prospect of home ownership financially untenable for a significant percentage of the population—who have no viable alternative other than turn to rental properties for housing. This means that investors should prioritize both single- and multi-family residential investment properties as it is almost guaranteed there will be a consistent stream of well-qualified potential tenants willing to a pay a premium rent price for the right mix of amenities and location.

Suburban Surge Will Continue

Even in the years leading up to the COVID-19 pandemic, there was an increasing demand for home ownership amongst the millennial generation—with a poll conducted by Zillow in 2019 indicating that 89% of respondents ages 25-35 preferred owning a home as opposed to renting. With the advent of teleworking accommodations following the pandemic, aspiring homeowners realized that they were no longer geographically tied down to the confines of large metropolitan markets and had the flexibility to move to more affordable suburban areas where they could get more square footage for their money. This trend is not expected to go anywhere soon, and real estate investors should take note of the fastest growing secondary markets in California that are drawing increased numbers of young professionals—all of whom will be on the lookout for housing options.

A Lending Partner Invested in Your Success

The ability to efficiently access the capital you need to quickly close on promising real estate investment properties is a must in today’s increasingly competitive marketplace. Ever since 1921, F.E. Forbes has been providing reliable funding for California investors looking to complete a broad range of investment ventures—from new construction projects to fix-and-flips. Our team of experts prides themselves in crafting innovative and flexible funding solutions that are custom tailored to meet our client’s unique requirements. Contact us today to find out more about how you can get the money you need in a fraction of the time and hassle it takes when compared to conventional lenders!

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