Today's Real Estate Forecast

Inflation and Affordability in the Housing Market: Supply & Demand

• Take note of the tension caused by rising prices and interest rates.
• Today we are moving beyond headlines and emotion to achieve clarity and respond with wisdom.

• The current housing market crisis is primarily a supply issue, with builders struggling to be able to build smaller, affordable homes.
• Middle range houses are particularly affected, with a severe shortage of starter homes.
• The supply shortage is driving up prices, especially for first-time homebuyers.
• The housing market varies by neighborhood and city, with different supply and demand dynamics in different areas.

Impact of Interest Rates and Building Permits on Housing Supply

• Low interest rates are keeping some homeowners from selling, as they prefer to rent out their homes rather than face higher mortgage rates.
• Building permits have plummeted in the last six months, leading to a decrease in new home construction.
• The decrease in new home construction will affect housing prices in the future.
• Affordability is not the primary issue; it’s the ratio of buyers to sellers in specific neighborhoods.

Inflation and Its Effect on the Housing Market

• Inflation has historically averaged around 3.6% per year since World War II, and it has recently increased due to the war in Ukraine and oil prices.
• Certain items, like eggs, have seen price decreases, but overall inflation is still a concern.
• Inflation affects landlords, increasing their expenses for insurance and property taxes.
• Bill shares a personal example of a recent property sale, highlighting the high costs of cosmetic rehabs in today’s market.

Opportunities in the Housing Market Despite Inflation

• There are always opportunities in the housing market, as there are always sellers with specific problems.
• Real estate allows for more direct problem-solving compared to the stock market.
• Find motivated sellers and solve their problems to make money in real estate.
• Bill shares a story about buying his first house on a credit card in the early 90s, highlighting the potential for profit in real estate.

Strategies for Investing in a Challenging Housing Market

• It’s always a good time to invest if you know how to create deals and find motivated sellers.
• Interest rates are unlikely to drop significantly in the short term, but lower rates would increase demand and drive up prices.
• A 50-year mortgage can have potential benefits, as well as the idea of leasing land for 30 years to make housing more affordable.
• Adjust strategies based on market conditions, whether the market is hot or soft.

Perspective and Faith in Real Estate Investing

• Bill shares a story about urban revitalization in Denver, illustrating how market conditions can change unexpectedly.
• Have the right perspective and look for opportunities in chaos, as described in Sun Tzu’s “Art of War.”
• Incorporate your faith into real estate investing, including listening to the cues of the Spirit and walking the land before making decisions.
• God will provide opportunities and ways to afford homes for those who believe and have faith.

• Don’t be resigned to renting, but believe in the opportunity to own a home.