It’s hard to predict
By: J. David Chapman/November 19, 2020
It is time to issue predictions for the new year. I have a friend and academic colleague at the University of Central Oklahoma. I respect his opinion and ask him questions frequently. He will almost always reply with, “it is hard to predict.” He will then go on to say, “but, if I had to guess, I would say …”
I have seen very few real estate academics or industry experts stepping up to predict what 2021 is going to look like. This will be the most unpredictable year in my 20-year real estate career. Considering the moving pieces in 2021 that could be pondered in predicting sector performance, most are saying it’s hard to predict. Those moving pieces are the COVID-19 pandemic, presidential transition, and the oil and gas industry. These three factors will certainly affect the performance of real estate as a whole, and some sectors more than others.
First, barring a vaccine miracle, we are going to enter 2021 still in a pandemic. After spending most of 2020 under pandemic conditions, it appears that we will be battling similar scenarios next year. For my predictions, I am guessing we will have a vaccine by April available to the general public. I believe, in the end, people will take the vaccine and it will be safe and effective. Although worth watching, it is hard to predict the effect it will have on the economy and the real estate market.
Second, we are coming out of the most contentious presidential election in my life. Currently it appears we will transition to a Democrat president. It appears Democrats will hold control of the House, but probably not the Senate. During his campaign, candidate Joe Biden hinted at changes in policy that would have a direct impact on the real estate industry. We are watching and listening; however, it is hard to predict the effect his presidency will have on our industry.
The last concern is the performance of oil and gas. Unfortunately, it appears the first two considerations will control the third. It seems oil and gas will improve with the controlling of the virus and could be influenced somewhat by national policy. I am not making excuses, and I plan to make predictions as always, but right now if I had to make a guess, I’d say focused hardworking real estate professionals will find a way to make money in 2021.
J. David Chapman is an associate professor of finance and real estate at the University of Central Oklahoma (jchapman7@uco.edu).