Real Estate Market Disrupters

Here we are at the end of another year, a good time to reflect on how things have gone and to look ahead at what’s coming. With regard to the real estate market, it’s interesting to see what has (and may continue to) affect housing prices and availability.

If you have been to the hardware store since the pandemic ended, you may have noticed wildly fluctuating prices. Sometimes costs are reasonable. Other times, they’re outrageous.

We’ve seen substantial disruptions in the supply and production chains. For example, a rare freeze in Texas knocked out a factory that produces the resin used to make PVC pipe. Prices went through the roof until the plant came back online. Then, although prices dropped some, they never went all the way back down.

High prices and unpredictable supply make people shy away from big construction projects, which is a bummer when we have such a serious housing shortage. The good news is that some construction is moving forward.

The Bella Vista subdivision project across from Ukiah Valley Athletic Club is scheduled to break ground in early spring. Obviously, when it comes time to sell the houses, the increase in construction costs (labor and materials) will impact the pricing for these homes, as well as how many are built and in what timeframe. But at least we’re finally getting some new market-rate housing.

Labor & Remote Work
The shifting labor market also affects real estate. The government’s reclassification of what it means to be an independent contractor will increase the cost of labor, as will the higher minimum wages for healthcare and fast-food workers. This may affect what people can afford to pay for housing.

The increased mobility of the workforce affects real estate in a different way. Beautiful rural areas that were not close to city centers with high-paying jobs did not used to be able to demand high housing prices, but for those areas that have fast, reliable internet, this is changing.

After the pandemic forced remote work upon everyone, it seemed to have broken any final lingering resistance to it. Now, although some work must be in-person (it’s hard to get a remote haircut or have a plumber fix a leaky pipe via Zoom), many people appreciate the flexibility of working from home or while on the road.

I know a guy in Sebastopol whose work is based in Chicago; he goes there for a week once a month. Another guy manages a real estate office in Ukiah from his home in Bakersfield; he comes here about every six weeks.

While there are benefits to people working in an office together, there are also plenty of inefficiencies. Social niceties required of in-person interactions take time. Polite people ask about how others are doing and whether their kids are thriving. Whereas, in an email you can get right to the point, and no one will think you’re rude. (Don’t get me wrong—I like social interactions. I’m just saying they take time.)

Artificial Intelligence
Although we haven’t felt much of an impact from artificial intelligence yet, I think it’s hard to predict all the ways it will shift the way we all do business. At a recent staff meeting, our ales manager, Jason VanHousen, did a demonstration using AI to write an advertisement for a house for sale. He hardly entered any information into the system, but because the house’s features were publicly available online, the AI program added all sorts of pertinent details. Will all future ads be done by AI? I doubt it, but AI could speed things up by giving us a running start at a great ad.

Eventually, AI could really help by streamlining and automating certain work processes. Imagine an AI algorithm that could keep the building permit process moving, removing the need for government employees to keep track of documents and take time to schedule inspections.

Next week, I’ll share a few more industry disrupters.

If you have questions about property management or real estate, please contact me at or call (707) 462-4000. If you have an idea for a future column, share it with me and if I use it, I’ll send you a $25 gift certificate to Schat’s Bakery.

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