2021 Was a very good year for real estate owners. We are currently in uncharted territory – a non-bubble boom. This is so different than 2005/6 when speculation was driving the market. 2022 will see the continuation with a slowing of the growth rates – but not by much. (IF we could build homes faster – we would and the curve would be less)
During our participation at the 26th annual “What’s Up Down South” economic summit Vardell Curtis, recently retired Director of the Washington County Board of Realtors, presented a tremendous amount of data that we want to share.
This is a key nugget of value I wanted to pull out and share with our tribe. Equity gains and appreciation rates. These figures are base numbers we as investors gauge the general health of our market. We’re able to calculate this specific to our own properties we own easy enough but as we look at investing we want to understand the general market. This is the pulse.
Every state, +/- 3, experienced significant equity gains. The western states did very well – Utah in particular is experiencing banner gains – as did CA, AZ, ID and WA. The average equity gain for Utahn’s in 2021 came in at $91k. For investors, this valuation gain certainly bodes well for our investment portfolios where we’re use to seeing appreciation rates from 4-7 % as normal.
Appreciation rates in Utah came in at 28.3% (Number 2 behind Idaho). Good news for investors. But here is the question(s) to consider. WHAT DO I DO WITH MY EQUITY? If we sell, can we replace the investment with a better cash-flow producer? Most likely not. If we sell, and can’t find a property and close in 90 days for a 1031 exchange then we may have ugly tax issues to address. We are suggesting to pull equity as either a cash-out refinance (especially since rates are relatively low) or a home equity line of credit (HELOC). Once you have access to your equity – shop and hunt for the good ones. Right now investors are seeking ROI’s (CAP rates anywhere from 4-8%) They still exist. Our team searches for these levels of opportunities daily. You may need to be prepared to do some TLC work or have vision but they do exist. (Sign up for our weekly investor review alerts to get these opportunities emailed to you)