Our 2023 Rental Perspective is here!
Unlike the 2022 Rental Perspective, 2023 appears to be very different. Here is what we are expecting:
Leasing
We expect to experience much lower leasing rates. All the movement during the pandemic is cooling big time. The interest in property came to a screeching halt at the end of October.
We also expect to see more job loss and large corporation layoffs/ hiring freezes. Restaurants and hospitality are still trying to recover. Small business continues to take the brunt of post pandemic woes. The tech industry boomed from 2020-2022 and now it appears bit off more than they can chew.
In 2023, leasing will demand a back-to-basics approach. More interaction and negotiating than inventory flying off the shelves.
We will also see more negotiating of rental rates at new lease and renewals. Owners will have to be more accepting of lower rates than they have grown accustom too. The automatic 10% increase will likely fall. It feels like 2008 but not as bad.
Maintenance
Here is where it won’t change. We expect to see continued delays in goods and services. We also expect cost to continue to rise with inflation. Higher costs of production can decrease the aggregate supply (the amount of total production) in the economy. Residents will have to be patient. Owner will have to dig in their wallets a little deeper. This is going to continue to cause the strife between two traditional adversaries. Property managers will have to continue to walk the fine line of balancing these two expectations. Oh, ya and the suppliers who are struggling just the same finding employees and materials. Residents and owners can at least agree on one thing, they want more product for less money. Only good news is we are seeing more vendors looking for work than before. Schedules are opening a bit because everyone has settled in and is frankly expecting a recession. If you want to join our vendor pool visit: www.netvendor.net/fbspm
Government Overreach
As we have seen since 2020 and before government did all they could to “protect” residents. Well, at least their version of protection. California is heading into year 3 of the state of emergency order. The governor has teased an ending to this with an arbitrary date in February. Fingers crossed. We have a homeless crisis that most politicians are blaming on the housing industry. Although many would argue they are 40+ years behind in building to keep up with demand. Evictions are two to three years behind and trying to catch up. Good luck there. Most owners are turning to a cash for keys option just to get their homes back, 2008 feels right? The City of San Diego is declaring Housing a human right which just means more regulations on housing providers. Because that is what the politicians do. Add more restrictions instead of solving the problem. The solution is simple, make building easier and profitable, you will have more supply to lower rents and lower homelessness.
2023 will be challenging. Sorry for the bad news, but you should be prepared. Our hope is that it will bring more homeowners to the realization that they cannot manage their own property. That it should be in the hands of professionals who invest daily in how to handle the property management challenges, current and future. The risk is too high, invest in your asset by hiring a professional management team.
