Here at Bold Commercial Real Estate, we like to stay ahead of the curve on economic trends in the Triangle. Lucky for us (and you), Dr. Michael L. Walden, William Neal Reynolds Distinguished Professor Emeritus at N.C. State, eats economic trends for breakfast (or is it lunch?).
The Triangle Association of Realtors (TCAR) recently held its Economic Forecast 2022 event with Dr. Walden as the guest speaker.
In case you missed it, here are the top three takeaways for commercial real estate in Chapel Hill, Chatham and beyond:
Spending is up and supply is down—which means inflation
You’re not imagining it—inflation is up and things cost more in 2022. The simple explanation is supply and demand. People have more money and they want to spend it. Where did the money come from? Simple: the government gave people money to keep the economy going, including stimulus checks and the child care credit (which went away in 2022).
Workers used time spent unemployed and receiving government checks to learn new skills in higher-paying industries. They turned those newfound skills into higher-paying jobs, which means more spending, which equals more demand.
With spending up, supply was going down due to supply chain issues and disruptions in production. People left the workforce due to Covid, with more people retiring early or dropping out due to the lack of childcare or other obstacles. Overall, workforce participation dropped, causing a worker shortage in certain industries.
High demand plus low supply causes inflation.
If you’re wondering, does this apply to real estate? Yes! You guessed it. Residential and commercial prices are up.
If you’re going to buy, buy now before interest rates increase
The good news: Interest rates are still low. The bad news: They are going up. If you’re thinking about buying, now is the time. The Federal Reserve will adjust interest rates up to account for inflation. Even in today’s competitive real estate market, this is the best time to buy to lock in a lower interest rate. But the Fed won’t hike interest rates all at once—they will do it incrementally, adjust, see how things go, then repeat.
North Carolina is still an awesome place to move!
Despite national trends, North Carolina fared better than other states and was—economically speaking—less hard hit by Covid. North Carolina made $10 billion in new business in 2021. The economy has been quick to recover and people are not only moving to N.C. they are spending a significant chunk of change on homes and businesses. As the economy continues to rebound, the state is a safe bet with both Apple and Google putting down roots in the triangle.
You can check out Dr. Walden’s talk at The Chamber for a more detailed breakdown.[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]
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