HAPPY HOLIDAYS TO EVERYONE, AND WE ARE FACING THE UNKNOWN IN 2023...

HAPPY HOLIDAYS TO EVERYONE, AND WE ARE FACING THE UNKNOWN IN 2023...

First, today is the day before, the day before Christmas Eve Day, and then we have Christmas, and then we officially celebrate Christmas the day after Christmas on Monday, the 26th of December. I just confused Grammarly so much that I think that my computer died. But the title for today's article was Happy Holidays, so I am wishing the Catholics and Protestants and the Jews and every denomination that has a holiday now a very Happy Holiday and next week, I can confuse all of you again because News Year's is going to have the same scenario.

As you can tell, I started today's article off on a light note because I don't know about you, but I am scared as hell for what 2023 will hold for us. The good news is that we filled our car with gasoline yesterday at Costco, which was less than $4 a gallon for the first time in a long time. But, the war still rages on between Ukraine and Mr. Putin. The other day, maybe it was yesterday, I said in my article that greed is terrible and ugly, and Mr. Putin is the definition of greed and stupidity.

But what will happen to the real estate markets in 2023? I say markets because there are residential and commercial markets, and each one acts differently when the interest rates go up and up and up. I am going to make this a two-part article, so let's look at the good news and the commercial market today.

There is still considerable activity in the commercial real estate market because the players are professionals, and they saw this coming from the beginning. They prepared for it and built up their reserves and are looking for those deals out there that really are good. I am seeing normal cap rates and, therefore, normal prices, although somewhat reduced, even today.

The one negative thing is that the new investor is being weeded out, and the door may be shut for them as far as starting to invest right now. Actually, they have to adjust to today's circumstances. Instead of starting out with a 4 to 6-unit apartment building in Southern California, probably not the best example for those who do not understand the Southern California market, they have to start with a duplex or a single-family residence to rent it out. I have talked to clients about this, and the starting point has to be lower than before.

But there are deals out there, and you have to look for them. It's not like before when everything, and I mean EVERYTHING, went upside down, and the commercial real estate market just stopped. There is a light at the end of the tunnel, and it's NOT a train coming at you. So, work on your reserves and build up a war chest, and everything will be back to normal; it may be a new normal before the elections in November 2024.

I will see you tomorrow to talk about the residential real estate market, and I will officially wish all of you a happy, healthy, and wonderful holiday!!!