what is the 2022 Outlook and Impact for Real Estate Investors

• Inflation rate (CPI) hit 7.1% in December, a 40-year high

• The primary factors driving inflationary pressure will likely not be resolved in the short-term

• Supply Chain:

  • - Disrupted supply chains is restraining the amount of goods and raw materials available to the market

  • - At the same time, consumption is elevated with inflation-adjusted retail sales up 16% from pre-COVID

  • - This is supply-demand mismatch is stoking prices and putting upward pressure on inflation

• Labor Shortage:

  • - Record 4.3M shortfall of job openings and people looking for work creating wage pressure

  • - Rising wages is a "sticky" form of inflation and will likely stay with us even after the shortage is resolved

• Housing Shortage:

  • - Lack of affordable housing options is putting upward pressure on rents and home prices

  • - Rapidly rising housing costs will keep inflation elevated over the short to mid term

• The Federal Reserve has signaled a more hawkish stance in an effort to relieve elevated inflation pressure

• For CRE investors, this could mean rising interest rates over the short term