A Shaky Housing Market's Silver Lining for Investors

Today’s housing market has a lot of people scared, and investors are worried as well. Home prices are starting to slump, inflation is hitting decade-long peaks, and interest rates have turned everyone’s cash flow cushions into break-even deals at best. Is there any respite in the wild real estate market? And why do top investors seem so excited about it?

We’re back on another correspondents episode of "On the Market," where Professor Dave has asked students Henry, James, and Kathy to bring in their favorite real estate market news for show-and-tell. These stories hit different aspects of the housing market, showcasing the cracks forming in the overall economy and what investors need to be prepared for to react. We talk about how home flips are being discounted across expensive coastal cities, why rent price growth is starting to stall, and how buyers got their negotiation power back.

We’ll also be touching on the recent inflation data, showing that we have a long way to go until we return to the good ol’ days of two-percent price growth. Then, we take a request from the On the Market Forums where we answer an age-old question: When should you sell a BRRRR property? All this, and more, coming up on this week’s data-first housing market deep dive!

00:00 Intro
02:12 Another Nasty Inflation Report
08:42 Home Flips on Discount
16:26 Rent Prices Start to Stall
26:42 Buyers Regain Control
36:46 Crowd Source: When to Sell a BRRRR?

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Episode 48

#biggerpockets #onthemarket #onthemarket48

[jf]

Watching the economy right now is like watching a semi-truck careening down the highway with no brakes and it’s just side swiped a mini van and is heading for an oil tanker. Anyone who says “I think it’ll level out and get better in a little while and won’t be too bad” doesn’t know that the guy behind the wheel is actually in the sleeper bunk taking a nap after his ice cream snack. This situation obviously ends in a fireball and a lot of pain. Then comes the shut down of the highway (as they sort through the twisted metal looking for survivors). Then, after a lot of work we can talk about getting it cleared. We can’t even think about getting traffic going again because the big wreck hasn’t even happened (but is totally unavoidable at this point). It’s just a waiting game right now until the big drop.
Interest rates are going to 10%. Inflation is going to stay between 8-10% and the Fed will crash the markets (as they’ve promised to do).
The Fed’s attitude has been that they are totally ok with crushing any market they need to in order to carry out their plans. The problem is, their strategy isn’t working but their idea is to do more of what isn’t working. We’ll have crazy interest rates and crazy inflation simultaneously.

[ericbrown]

19:00

Why would a reduction in home prices cause rents to fall? Most people are not buying homes with cash so the monthly payment is what matters, and the monthly cost to own a home is substantially higher today than it was a year ago, or even six months ago. This causes the demand for rentals to rise which causes rents to increase. Unless you’re referring to an area of the country that people are fleeing, I’m not following why you think rents will fall because home prices are lower.

[selinabanda]

This show is vital to this market investment. Thank you all. ❤❤❤❤

[andrewm]

Kathy again killing it! That
Y over Y is going to hit a wall.

[ChuckNorris-Investor]

Thank you Dave and the Team for Answering my Brrrr Property in Hawaii. James Got got my My Mind spinning on R.O.E
My Cashflow is Around 300$ monthly with About 250, 000 in Equity and No money in the deal.

[buyfixrentrepeat]

This market has me scared lately. Im hoping this change and go up again

[juliancolvard]

Interest rates have nothing to do with the rising cost of general goods and services. We are in a labor shortage still. That is the main cause

[juliancolvard]

Hate when people blindly talk about inflation as if everything is rising in price. Home prices are dropping consistently.